Guaranteed Lump Sum Payment

Like a term life insurance whole of life insurance pays out a lump sum. However unlike a term policy that pays out the sum assured within a set term, whole of life insurance will always payout provided that premiums are maintained, whole of life insurance lasts for the full life of the insured and will guarantee to payout on death whenever that occurs. Because the amount of cover can be set at the beginning and the certainty of the payment guaranteed whole life insurance has many uses that cannot be met with a term policy. However because at some point the policy will payout the monthly premiums will be higher than that of a term policy.

Different ways to set up Whole of Life Cover...

Single policies are quite simple in that they will pay out the sum assured on the death of the policyholder. These policies will tend to be used to provide a sum assured to help towards final expenses or to provide a lump sum for the remaining partner to live off. Other uses can be for providing a lump sum to be used for income for a permanent dependent relative such as a disabled child who will need looking after for life. Joint whole of life policies have various uses too. These can be set up on a joint life first death basis in which the sum assured is paid on the first policyholders death. Again these can be used to pay final expenses or provide a lump sum for the remaining partner. Another way to set up whole of life insurance cover is on a joint life second death basis. In this case on the 1st death nothing is paid out but on the second death a lump sum is paid out. This type of policy can be used for inheritance tax reasons, final expenses or to provide a legacy for children.