Updated: December 14, 2022
Is Whole of Life Insurance Worth It?
Is Whole of Life Insurance the right type of policy for you? Our guide outlines all the pros and cons to help you make up your mind.
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Author: Richard Angliss - Finance Expert
Updated: November 20, 2019
When you’re in a situation and feel it’s time to get life insurance you’ll probably begin looking around at your options. That’s when you’ll discover there isn’t just one type of life insurance, but a variety of them. With three main types, including whole of life insurance, you may wonder which is right for you and what the benefits of them are.
At first glance, whole of life insurance seems like the obvious option. After all, there’s a guaranteed payout no matter how old you are when you die, ensuring your loved ones are looked after financially even after you’ve gone. However, this type of life insurance policy is always more expensive than other options which can make a lot of people pause to ask the question, ‘is whole of life insurance worth it?’
To help you try and answer that question we’ve written this article:
If you want to skip the reading and talk to someone who can answer your questions.
All the experts we work with are independent advisors with access to insurance providers across the whole UK. They have the tools and the knowledge to make sure you get the best advice and can help you find an insurance policy which provides the cover you need for the best available price.
Call 0808 189 0463 or make a quick online enquiry we’ll match you with an expert advisor who can talk you through the options which might be right for you. They are regulated by the Financial Conduct Authority which means they adhere to strict rules of conduct.
Is Whole of Life Insurance right for me?
In some cases, whole of life insurance is worth it. But to decide if it’s right for you, you should consider what’s important to you with regards to what you want from your life insurance cover and if the benefits outweigh the problems.
If you’re the main earner in your family, then whole of life insurance might be worth it at any price because, provided you keep up with the monthly payments, your whole of life insurance policy will pay out no matter what age you are when, or how, you die.
One way to work out whether whole of life insurance is worth it for you, is to work out the financial side of it. A straightforward way of doing that is to add up how long it takes for your monthly premiums to add up to the cover you need.
If you want a £50,000 payout when you die and your monthly premiums are £100, it will take you 500 payments, or around 41-and-a-half years to save the same amount if you paid £100 into a savings account every month.
If you take your whole of life policy out when you’re 30 then you’ll be 72 before you’ve paid more to the insurance company than they’ll eventually pay out to your beneficiaries.
Of course, provided your health is good then it’s likely you’ll reach that age. But, life insurance is also there for the unexpected and if the unexpected did happen before you reach the age of 72, your family would get the guaranteed £50,000 regardless of how much you’d paid in through your premiums.
If the financial side of paying for your whole of life insurance policy isn’t too important to you.
Or, you take out your cover when you’re older so it will definitely be worth it in financial terms (at least in the basic way we calculated it above) then you need another way to work out how ‘worth it’ whole of life insurance is.
Being able to go about your everyday life, with the knowledge that your immediate family will be financially comfortable if you die, is something that’s important to many people.
If you want the comfort of knowing that your immediate, or wider family, will definitely benefit from your whole of life insurance policy after you die, then that is also often enough to make it worthwhile for you.
However, to ensure you select the right life insurance policy for you, whole of life or otherwise, then speaking with an expert can help. They can answer all your questions and ensure you get the best deal for the right policy that will give you the life insurance cover you need, when you want it.
Call 0808 189 0463 or make a quick enquiry for a free, no-obligation chat with one of the expert advisors we work with.
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How does whole of life insurance compare with term life insurance?
Whole of life and term life insurance policies differ mainly on when they will payout.
Whole of life insurance pays out whenever you die, while term life insurance will only pay out during the term, or time period that you have set it up for and agree to make the payments.
How they compare in terms of being worth it or right for you, depends on:
- Your specific situation.
- What you need from your life insurance cover.
- How the finances add up, today and in the future.
If you want total peace of mind that your loved ones will receive a lump sum insurance payout no matter when you die, then whole of life insurance could be the right decision. However, if you only want insurance to cover a certain debt, such as a mortgage, or a certain period in your life, while your children are in school, for example, then a term policy could be best for you.
If you’re unsure as to which would be the right decision, with the best benefits for your needs, then speaking with an insurance advisor can help. They understand everything there is to know about all the different policies available, including whole of life insurance and can help you choose the right cover, provider and deal for your needs.
What are the pros and cons of whole of life insurance?
As with most things in life there are good and bad sides to whole of life insurance. Understanding the pros and cons of whole of life insurance can help decide if it’s worth it for you.
We’ve listed the main pros and cons below to help you understand exactly what you would gain from a whole of life insurance policy, if it might be the right option and if it’s worth it.
The main benefits of whole of life insurance are:
- Your insurance will pay out the full lump sum, no matter when you die.
- If you write your whole of life insurance cover under trust, then the beneficiaries won’t pay any inheritance tax on the lump sum they receive.
- The lump-sum your beneficiaries receive is set and will be paid out regardless of investment market conditions.
- In many instances, your beneficiaries will receive more from the whole of life insurance payout than you have paid in.
The main problems some people encounter are:
- Whole of life insurance cover is more expensive than term policies, sometimes considerably so.
- With whole of life insurance you must continue paying into your policy throughout your life, this means you will probably have to commit some of your pension to paying the premiums when you’re older.
- If you miss payments without speaking to your provider the policy could become invalid even if you continue making payments afterwards.
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Do I really need whole of life insurance cover?
When it comes to deciding if you really need whole of life insurance and if the good points outweigh the bad, that’s a decision only you can make.
We’ve given you some details of the pros and cons of whole of life insurance and also tried to help you work out if its worth it.
However, if you’re still unsure if the advantages over the disadvantages or if it’s something you really need, then speaking with an expert can be a big help.
The right life insurance broker will:
- Have experience with all types of life insurance cover.
- Answer all your questions relating to the benefits and problems.
- Help you find the best life insurance policy for your needs, whole of life or otherwise.
- Help you decide why whole of life insurance is a good, or bad, idea for you.
Speak with a whole of life insurance expert
To get more information on whole of life insurance cover and decide if it’s worth it for you then speaking with an experienced life insurance advisor is a good idea.
They understand life insurance cover options, can help you understand the pros and cons and choose the best policy for your needs. To speak with the right life insurance broker make an enquiry or give us a call on 0808 189 0463.
We’ll go through your details and needs and connect you with the right insurance advisor for your specific situation who will get in touch with you at your convenience. The service we offer is free and there’s no obligation.
All the expert advisors we work with are experienced independent financial advisors with access to insurance providers across the entire UK, so you can be sure you’ll get the best advice and the right policy for your needs at the best possible price. Saving you time, hassle and money.
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About the author
Richard Angliss has made a career in financial services which stretches over 40 years.
His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.
For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.
At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.
With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them. Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.
He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.