What is whole of life insurance?
Whole-of-life insurance is a life insurance policy that guarantees a lump sum payout to your family whenever you die, offering lifelong coverage
How much does whole of life insurance cost?
Whole-of-life insurance is typically more expensive than term life insurance or family income benefit due to the certainty of a payout. Unlike term cover, where a payout only occurs if you die within the policy term, whole-of-life guarantees a payout at some point, making it costlier.
It's important to ensure that you can afford the premiums not just now but also into retirement, as missing payments could put your policy at risk. Depending on the policy, you may only need to pay premiums until a certain age, often around 90. The total cost of the policy will depend on factors such as your age, health status, and lifestyle.
Is whole of life insurance worth it?
Whole-of-life insurance can help reduce an inheritance tax bill.
When you die, inheritance tax is charged on any assets exceeding £325,000. By writing your life insurance policy into a trust, the payout goes directly to your beneficiaries as a tax-free lump sum, which can be used to help cover the inheritance tax bill.
If you're considering this option, it's highly recommended that you seek expert tax advice to ensure the strategy is appropriate for your circumstances and structured correctly.