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Whole of life policy

Protect your family against the inevitable

A whole of life policy will pay, at the minimum, the sum assured on the insured lifes death, when ever that may occur. The policy premiums are fixed throughout the term of the policy and based on the age, lifestyle and health at the underwriting stage of the policy setup.

Premium options

You may elect to pay regular fixed premiums throught the term of the policy or a single premium at the start of the policy. These premiums will be used to provide the life cover with a large proportion invested by the policy insurer to build the cash value of the policy.

If you elected to pay regular premiums and for whatever reason decided you wanted to stop paying the premiums you have a couple of options besides cashing in your policy. You could ask the issuing insurer to take the premiums from the built up cash value or reduce the sum assured. This will ensure you continue to have a level of life cover.

Tax advantages

A whole of life policy, through its term, builds up a cash value. This is different to the sum assured which is a fixed amount written into the policy at the outset. At the start of the policy the cash value will be considerably lower than the sum assured but as investment returns are added each year by the issuing insurer the cash value can grow to exceed the sum assured. If you decide to cash in your policy you will receive the cash surrender value, ie, the cash value. You are only liable to tax if the cash surrender value exceeds the amount you paid into the policy by way of premiums. Moreover, your liability will only be for the excess and not the full amount. On your death your beneficiaries will receive the greater of the sum assured or the cash value - tax free.

Policy types available

Generally speaking there are two main types of whole of life policies available,-

  • Non-participating

    The sum assured AND the cash value are written into the policy and guaranteed at the outset. The policy issuer bears all the risk associated with up and coming expenses attached to the policy.

  • Participating

    A fixed and guaranteed sum assured is written into the policy at the outset while the cash value is not. The cash value depends on the investment returns added to the policy by the policy issuer over the term of the whole of life policy. A common investment vehicle adopted by whole of life policies is with profits but can also be unit linked.

Deciding between a whole of life policy and a term assurance policy is an important decision to make. Let us help you make the most suitable decision for your circumstances.