Whole life insurance provides a whole different level of cover
When you shop for life insurance, you’ll usually just concentrate your search on the term life insurance range of products. For many customers being covered when they need it the most is the only important thing, and the cost of term life insurance means that covering your family financially is essentially very affordable.
Many people will not even stop to consider whole life insurance, which has been designed to offer customers insurance for their whole lives, but is around eight times more expensive than the average term life insurance policy.
We think this is wrong, because whilst whole life insurance is expensive, it also has an awful lot going for it. First of all, it’s got a guaranteed return on investment. The majority of customers who pay their term life insurance for 25 to 30 years whilst they need it the most will live beyond the term of their policy and never see a penny back. You may argue that’s the same with most other forms of insurance where you never make a claim, but with whole life insurance you know that at some point you’re going to get your money back.
You’ll also find that the amount you pay in premiums throughout the lifetime of the policy is slightly less than the final payout, as the insurance company know they can invest the money you are paying in. If you die before you’ve paid all your premium payments, you still get the full amount.
One of the biggest advantages of whole life insurance is the fact you can borrow money against your final payout later in your life when you decide you don’t need to leave as much money behind anymore.
Typically customers who have paid off their mortgage, and seen their children leave home will reach a stage where it’s less important to leave money behind in the future and more important to access that money now. They can use the money to pay for children’s house deposits, or university fees, or even use it to help pay for the ever increasing costs of retirement.
Whole life insurance may be more expensive, but it’s an investment, and one that’s guaranteed to pay out.