As the name suggests, ‘Whole of Life insurance’ provides life insurance cover for the whole of your life. The sum insured is paid to your estate following your death.
Whole of Life insurance is more expensive because it is certain that the life company will eventually have to pay the sum insured.
Premiums will depend on the sum to be insured, your age, your sex and whether you smoke or not and your health. A non-smoker is usually defined as someone who has not smoked for at least twelve months.
Your Whole of Life cover and Inheritance Tax Planning
You can use your Whole of Life insurance policy to help offset this inheritance tax liability. You do this by setting it up by what is known as, a Section 72 Life Insurance policy. This is a special insurance policy approved by the Revenue Commissioners under Section 72 of the Capital Acquisitions Tax Consolidation Act 2003. It is taken out specifically to help pay inheritance tax. The money paid out, when it is used to pay inheritance tax, is then not liable to tax. With enough cover in place you can protect your loved ones from an inheritance tax bill. Otherwise, they may have to sell the family home or take out a loan to pay the tax. So, setting up a Whole of Life policy this way can ensure that your assets can be passed on and enjoyed by your loved ones rather than being used to pay a tax bill.
You can add indexation to your policy as a way to help combat inflation. Your cover and premiums will increase by a certain percentage each year as per the life company’s terms and conditions
if you take out a Royal London policy, you can add the Life Changes Option to your policy for an extra 10% on your premium. This unique option is all about giving you choice and control should your circumstances change in the future. So, under this option, you can stop your premium payments after having had your policy for 15 years or more – and still get something back.
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