What is Whole Life Assurance?

Whole life assurance provides you with coverage from the point in time at which you take out your policy until the day you die. It provides you with complete piece of mind that your dependents will get a pay-out upon your death and the sum of money insured is not restricted to your death during a fixed period of time. Under this kind of policy, the sum of money will definitely be paid out when you die.

This is why whole of life insurance is also called 'assurance'. It covers an event which definitely will happen. Death is an event which happens to all of us so there is a one hundred per cent probability that by taking out a whole life assurance policy that the insurance company will have to honour the pay-out. Because of this, whole of life assurance is the most expensive kind of policy available.

There is a difference in how some insurers operate their whole of life policies, so it may be worth shopping around to find the best deal for your circumstances. Some insurers only require you to make your whole of life premium payments until you are about sixty-five years of age. This does not affect the lump sum paid out to your beneficiaries when you die.

However, other insurers specify that you must keep making your premium payments until you die. As people are now living for much longer than they previously did, the likelihood of all insurance companies eventually following the latter practice is quite high. Therefore, if you are interested in whole of life assurance, it might be better to try to take out a policy now which might allow you to stop payments once you retire, rather than waiting a few more years.

Types of Whole Life Assurance

There are a variety of different whole life assurance policies on the market. Nowadays, most policies are a mixture of life cover and investments, so the lump sum payable to your family upon your death may be partly dependent upon investments made on your behalf by your insurance company. The process of these investments will hopefully lead to an increased value on your policy.

When you take out a whole of life policy, your premium is usually fixed for a period of ten years. Once your first ten years are up, your policy is available to be reviewed. Dependent on the investments made by your insurer and the current value of your policy, your premium payments may need to increase, so that is something to be aware of if you decide to take out this kind of unit-linked policy.

Whole life cover can also be mixed with other types of protection to create a universal life cover policy. For example, if you are worried about illness or the effects of getting a debilitating affliction as you grow older, you can mix your life cover with critical illness insurance. This will give you protection if you come down with a serious illness which restricts your income and quality of life, but does not immediately cause your death.

In summary, whole life assurance is a very worthwhile policy to have if you are concerned about the financial fate of your dependents when you die. The expense represents a bigger investment than a term life insurance policy, but the benefits are better and the pay-out guaranteed. If you are looking for a type of life assurance which offers more than simply peace of mind and gives a good financial outcome for your family, then whole life assurance may be the best policy to choose.

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