Whole of Life Insurance Guide

Providing life long peace of mind...

Whole of Life Insurance lasts for your entire life and pays the insurance amount to your dependants whenever your death occurs. Whole life insurance is not limited to a specific period like term insurance which means premiums are generally more expensive because it is certain that the insurance company will eventually pay out the sum insured when you die.

The premiums are invested in a life fund and the cost of the life cover is met by monthly cancellation of units within the fund. Enough units are cancelled each month to pay for that months cover.  If the performance of the fund exceeds the monthly withdrawals a surrender value can build up over time.

TYPES OF WHOLE OF LIFE INSURANCE

• Maximum  Cover - The cheaper of the two and designed to provide the maximum level of cover for the premium quoted. The initial premium and sum insured are guaranteed not to increase for the first 10 years. The plan will then be reviewed and the  premium is likely to increase to maintain the same level of cover.
• Balanced Cover - This cover aims to balance the level of life insurance with adequate investment to support the cover in later years and maintain the original premium throughout  life. This relies on the value of units invested in the underlying fund growing at a certain level each year.  Increased charges or poor performance of the fund could result in the premium being inadequate and may have to be increased to maintain the same level of cover.

BUYING TIPS

1. Check the investment performance history of the insurance companies life funds.  Poor performance could mean that your premiums would have to increase to maintain the cover in later years. Past performance is not a guide to future performance.
2. For Balanced cover, check the investment growth rate used to calculate your premiums.  This sets the level at which the life fund must perform to maintain your cover for  the premium quoted. Clearly, the lower the growth rate required to maintain your cover and original premium the better.
3. Can waiver of premium benefit be included in your plan.  This is a valuable extra which, if you become too ill to work for a number of months, will ensure your cover continues without you having to pay the premiums.

THE  COST
The cost will depend on a number of factors, the most important being your age, sex, lifestyle, if you smoke and your general health. Women pay less than men because, on average, they live longer.

POLICY OPTIONS
You can include one or more options to improve the level of protection provided by your policy. Adding any of these options will increase the premiums.

• Waiver of  Premium - if you are unable to work due to illness or injury, your insurance company will continue to pay your premiums and keep your cover in force.
• Critical Illness Cover - the insurance benefit will be paid if you are diagnosed as having a critical illness covered under the policy.