Braunton Independent Financial Advisers

Whole of Life Policies

With a whole of life policy, the sum assured is paid on the death of the policyholder, whenever death occurs
Unlike term assurance, it is a certainty that these policies will have to pay out
There is an investment element within the premium
After an initial period, a surrender value will build up, giving the policyholder additional options - encashment, policy loan, or making the policy paid-up
Although a cash value will build up, whole of life policies are unsuitable for savings purposes. There will be little or no surrender value payable for at least two years. For a number of years after that time the surrender value will almost always be less than the amount of premium paid
There are several types of whole of life policies with differing investment options, different risk levels and options to increase the investment element to provide the potential for a larger surrender value (not guaranteed)
Premiums are often guaranteed for an initial 10 years and reviewed every five years thereafter in line with the policy holder’s age and life expectancy. Reviews can be more regular once the policy holder exceeds age 70-75
No medical evidence will be required at the review date unless the sum assured is increased
Typical uses include; provision for inheritance tax liabilities, business protection, shareholder protection