Whole of life insurance policies are more of a recent development than that of term insurance. It came into existence to fill a gap made by consumer needs and concerns.
It seems that those who were interested in life insurance realised that they could be paying premiums every month for 20 or 30 years and have a very small chance of actually getting a pay-out.
To remedy this, insurers started to offer whole of life insurance that would not just cover for a short period of time but for a lifetime. Those who take out whole of life policies are a lot freer to utilise the cash gathered under their policy.
Whole of life policies often require you to pay your premiums yearly, as opposed to the monthly schemes set forward by the term insurance policies.
- The policy will last for your whole life, meaning that there is no need to worry about the rigmarole of reapplying for new cover at any time
- Interest is gained on the amount of money put into the account, which can be passed on to your beneficiaries
- The insured are able to lend against their insurance policy. Life policies are always going to have to pay-out at some point, meaning that the amount you are putting away remains your money at the end of the day. This means, you are either able to lend against the policy as a bank loan or lend from the insurance company itself. This allows you to unlock some of your accumulating wealth before the end of your policy