Whole Life Insurance

Whole life insurance is a premier life insurance product offered by a number of life companies. Its basic premise is that a lump sum payment is guaranteed upon death of the insured life, regardless of what age death occurs at. This means that unlike term life insurance where a lump sum payment upon death is only guaranteed to a certain age, whole life policies can be relied upon to make a lump sum payment that is free from any age restrictions. What's more, whole life policies can even be configured so life insurance coverage continues after payments of whole life premiums stop.

The advantages of whole life insurance

Without a doubt whole life insurance is the most comprehensive type of life insurance available. If you want the peace of mind that your family and dependants are financially secure once you leave this earth - and you want that peace of mind GUARANTEED - then a whole life policy will rise to the challenge. Some life insurance companies will even allow you to link a critical illness policy to your whole life insurance, enabling you and your family to receive the benefit of your whole life lump sum before you die.

Whole life insurance offers a host of other advantages too…

Tax exemption: The lump sum paid out upon death is exempt from income tax and also from capital gains tax (CGT). If the whole life policy is legally placed in trust then your family / dependants will have no inheritance tax to pay either.

Inflation linked: Whole life policies can be index linked to inflation. This means that the sum insured will not devalue over time.

Continuous insurance cover: It is possible to arrange your whole life cover to be fully paid-up by a certain age limit, after which life insurance cover continues until death without any further payment contributions being needed. This means that you can arrange to terminate insurance payments when you retire or before, easing the burden on your personal cash flow in later years. Naturally, the earlier you terminate payments then the higher the monthly life insurance premium will be.

The disadvantages of whole life insurance

Does whole life insurance sound too good to be true? If it does then you'll want to know the catch…and the catch is the cost! Whole life policies are not cheap, in fact they are the most expensive form of life insurance available. Even a young healthy individual who does not smoke should expect to pay several times more than the premium amount on a standard term life insurance policy. For the less healthy individual, the premiums will be even higher.

Furthermore, most life insurance companies require whole life applicants to undergo a medical before the life insurance is underwritten. Whole life policyholders may also be subject to premium reviews at regular intervals throughout the life of the policy.

Article Source: http://www.moneyarticlelibrary.com

Gary Tallon is an established life insurance author and is currently working with cheap UK life insurance companies.

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