Compare Whole Life Insurance

Prefer to talk to a
Professional debt advisor

Talk through your problems with a
qualified, FCA regulated experts and
find the best solution for you

Whole of life insurance guarantees that an insurance provider will pay out a lump sum to your loved ones when you die.

Reveal the next 5 top deals

A Guide To Whole Life Insurance And How It Works

Life is unpredictable and accidents can happen at any time. In fact, most people usually take a life insurance policy just for this reason. A good insurance policy will cover you in case of accidental death and it will pay out a substantial sum in case you do survive until the end of the policy.

However, other buying and taking on a good whole life insurance policy is a little dicey. Howe do you choose a policy that is uniquely suited to your particular needs? Let’s find out.

Why Should You Choose A Whole Life Insurance Policy?

These types of insurance policies are better than term plans as they are tied to the cash part of the plan. If the provider invests the policy with a reliable investment fund, there is a very good chance that you will come out ahead with a larger return on your policy. There is no downside with this kind of policy and you will eventually get a good return on your payments.

Another point to note is that this policy is different from a term plan. A term life cover policy will provide benefits only in case of the owner’s death. This is not the same as in this policy you also get benefits no matter what but the exact amount of benefits will depend on the investment fund and its profits.

The policy is also an investment as it accumulates benefits as time goes by. You can close it at any time and recover your money minus fees and you can also choose to simply withdraw money from the fund getting instant cash funds. The benefits from this type of policy are also not taxable in the UK and you can use the policy for many different reasons.

However, we do recommend you speak to a licensed financial advisor before you actually proceed with any kind of policy.

How Do Life Insurance Policies Work?

Life insurance policies are simple. The owner of the policy pays the insurance company a small amount every month or every year. The company collects the money and covers it interest and an additional amount that is paid out in case something happens to the owner’s life during the duration of the policy.

A portion of the monthly premium free is supposed to be a mortality fee that covers the cost of the policy and is taken by the company while the remaining amount gathers interest or is invested by the insurance provider. Some companies also provide a specific interest rate while other policies have other requirements.

The exact policy terms may vary from policy to policy and company to company but the basic terms remain the same.

What Influences The Cost Of The Policy And The Duration Of The Policy?

This is a very simple factor. The older you get the more chances you have of developing health problems that may shorten your lifespan. The younger you are, the healthier you are and the lesser the chances of getting any kind of health problem. As a result, younger people usually do have the chance of getting a cheaper whole life insurance policy while older people have to pay more.

Eventually the idea is that the cash account or payments you make go towards covering the cost of your health as you age. You can also use the policy as an investment that will pay out when the policy gets over. You can surrender the policy at any time and cash it in for money to reclaim your cash payments minus the fees.

Choosing The Policy

Most insurance companies allow you to choose payment amounts, terms and fees. They can also help you choose policies for your entire family. For example, you can choose a policy that offers a low level of insurance in which the whole amount of your cash payment goes towards investment.

In this type of policy, you make a good return on your policy. This kind of policy works if you are in good health and very young. On the other hand, you can choose an insurance policy with a higher guaranteed insurance level. In this type of policy, a smaller amount of your policy is invested and you may have to increase your policy payments as time goes by.

However, no matter which type of policy and time line you choose, in the end you do have a lump sum cash payment coming to you when the policy terminates.

In the end, you should know that life insurance policies are very useful and essential. Policies for younger people are cheaper as compared to older individuals who might already be developing chronic health conditions. However, in the end both young and old should get policies are quickly as possible to protect themselves and their families.