What It Is

The main thing in common between whole of life insurance and term insurance, or term assurance, is that both policies pay out to the holder on death for the length of the policy. The big difference is with the meaning of term. For whole of life the policy is valid for the whole time of the insured person’s life whereas with term insurance the policy is only valid for a specific period of time.

Owing to this fact term insurance, especially short term term insurance can be significantly cheaper. This is due mainly to the fact that it will only run for a specified period and there is a chance that the life assured will not die during this period. However due to the fact that whole of life insurance will run for the whole of the life of the client there is somewhat of a guarantee that it will definitely pay out some day and for that reason it is more expensive.

Another reason whole life insurance can be dearer is the fact that a lot of plans, though not all, do build up an investment element and again this is not without cost. Now at this point it is worth pointing out that whole of life insurance is not a very effective savings plan so if you are ever looking for a good investment whole of life insurance is probably not the right product for you.

Whole of life insurance policies include this investment quotient as a way of covering the growing costs of insuring against the death of the person insured. To clarify this, when you take out a life insurance policy, the insurance company has to start off by working out the chance of you dying and when that might happen and then calculate the policy accordingly. This is difficult with whole of life, as the insurance company has no idea of when you may die and therefore no idea of the length of the insurance policy. Because they cannot see into the future, the investment part can be added in for them in order to cover the costs of the chance that you may live for longer than they predicted.

Now that you know all about what whole of life insurance is, we can now look at how to make it more affordable. With the majority of whole of life policies, there are three levels of premiums which you can work from and three levels of benefits. Although these are both similar in from, some people want a good premium rate and some people prefer better benefits, so there are both types of policies available to you in order to suit these needs.

I will deal with a premium based plan, first is maximum benefit. Basically the quote is prepared with particular emphasis on producing the maximum sum assured for a given premium. This will result in the most life cover for the lowest premium. However it will only last for 10 years and at that 10 year point the plan will be reviewed and the premium will go up or the sum assured will go down. It should be noted that this type of plan is generally funded at the expense of the investment element of the plan so do not expect any significant fund value if any.

Next is standard cover this will generate a quote that should be maintained throughout the life of the contract. This is the best type of whole of life insurance quote as it will more than likely be the most accurate long term premium as the life insurance company is giving you the quote based on what they think the cost of cover will be for the duration of your life.

The last option is minimum assured cover. This will definitely be the most expensive option as it depends primarily on investment to create cover. As such, there is little contribution towards a life insurance policy. Before embarking on this sort of plan, it is extremely advisable that you discuss it with your financial advisor first. If investment is the way you have decided to go, there are better performing and more cost effective options available to you than using a whole of life insurance policy to do it.

It is important to know that sum assured plans also work on the basis of minimum premium for maximum payout. For example, standard premium gives standard cover, and maximum premium for minimum cover. Regardless of this, it is always most advisable to seek out the expertise of an independent financial advisor when considering level term or whole of life insurance cover as they will be best able to give you good advice as to what to choose. Remember, your family will be thankful of the time spent when they actually need to use your life insurance.

So in summary you can get cheap whole of life insurance quotes by quoting an either maximum cover or minimum premium basis, these quotes will give you the most cover for the least premium but you should always bear in mind that the true cost of providing that cover for the whole of your life will have to be paid some time in the future so you will not be able to keep those premium levels that low forever. That said it is a good way of getting some whole of life insurance cover at what may be an affordable cost.