Whole Life Cover
What is whole life cover?
Whole life cover is a form of life insurance which provides a customer with life insurance for their entire life, and guarantees a return on years of investment, as it has no payout term, life term life insurance cover.
One of the reasons whole life cover is picked by many customers over term life insurance is that it will provide a payout, whenever a customer finally dies. Most term life insurance policies will have a set term, and if a customer dies after the cut off date for this term they will receive nothing. Whilst many have a several month grace period after the end of the payment term, a customer could die just a few days past the end of the term, and leave their family with nothing.
Whole life cover is substantially more expensive than term life insurance as a result, but this is because every single customer will receive a payout eventually, meaning the insurance company providing the whole life cover must charge at least the final payout in premiums throughout the duration of the payment term of whole life cover, to make any profit at all.
The majority of term life insurance customers live beyond the term of their cover, rarely offered beyond a customer’s 60th birthday, and will receive nothing, which makes it far cheaper to offer for an insurance company, who can assume they will only have to pay out to a small percentage of customers.
How does whole life cover work?
When you decide that you are going to take out a life insurance policy, you will have the choice between taking out term life insurance, or whole life cover. There are various variations on these two themes that you may wish to look at ask well.
You will be given a monthly premium to pay, based on your age, health, and the likelihood that you will die during the term during which you will pay for your whole life cover. You will also be given a length of payment term, which is how long you will pay for your whole life cover on a monthly basis.
Your family will then receive a lump sum payment whenever you die, and later in life you will be able to borrow money against your final payout when you no longer have a need for it.