Life insurance is a very important financial product that provides peace of mind and financial security for you and your loved ones should the worst happen. Choosing the right type of cover can be very confusing, especially with terms like “term assurance” and “whole of life” being used interchangeably.
At Howard Wright, our team of Chartered Financial Planners are here to help you navigate these options and find the most suitable product for your short term and long term protection needs.
What is Term Assurance?
Term assurance is a life insurance policy that provides cover for a specific period, or “term.” If the policyholder passes away during this term, the policy pays out a “lump sum” to the selected beneficiaries. However, if the term ends and the policyholder is still alive the policy will expire and no payout will be made.
Key Features of Term Assurance:
- Defined Coverage Period:
- You choose the length of the term, typically ranging from 5 to 30 years. The policy only provides protection during this time.
- Affordability:
- Term assurance is generally more affordable than whole of life insurance due to its limited cover duration.
- Flexibility:
- Policies can be tailored to suit your needs, such as level term assurance (payout remains constant) or decreasing term assurance (payout reduces over time, ideal for covering a mortgage).
- No Cash Value:
- Term assurance has no investment element or cash-in value. It is purely a protection product.
Ideal for:
- People looking for affordable protection for a fixed time, such as the duration of a mortgage or while raising children.
Those who need to have financial security for dependants during specific life stages usually children aged 0 – 21 years old.
What is Whole of Life Insurance?
Whole of life insurance, as the name suggests, provides lifelong cover. As long as you continue to pay the premiums, the policy will pay out a lump sum whenever you pass away, regardless of age.
Key Features of Whole of Life Insurance
- Lifelong Coverage:
- The policy guarantees a payout whenever the policyholder dies, making it a permanent solution for financial protection.
- Higher Premiums:
- Whole of life insurance tends to be more expensive than term assurance due to its guaranteed payout and longer duration.
- Investment Component:
- Many whole of life policies include an investment element, where a portion of your premium is invested. This can potentially increase the value of the policy.
- Inheritance Tax Planning:
- Whole of life insurance can be an effective tool for estate planning, helping to cover inheritance tax liabilities or leaving a legacy to your loved ones.
Ideal for:
- Individuals looking for guaranteed financial security for their loved ones, no matter when they pass away.
- Those interested in using life insurance as part of their estate planning.
What Are The Key Differences Between Term Assurance And Whole of Life Insurance
| Feature | Term Assurance | Whole of Life Insurance |
| Coverage Duration | Fixed term (e.g., 10, 20, 30 years) | Lifetime |
| Cost | Lower premiums | Higher premiums |
| Payout | Only if death occurs during the term | Guaranteed payout on death |
| Cash Value | None | May include an investment element |
| Purpose | Short-term protection needs | Long-term financial planning |
How Can Our Team Of Chartered Financial Advisers Help
Choosing between term assurance and whole of life insurance can be very challenging, especially when balancing affordability with the level of cover required. That’s where our team of Chartered Financial Advisers at Howard Wright Financial Planning can help.
Expert Advice from Chartered Financial Planners
As a Midlands based firm with a team of experienced Chartered Financial Planners, we provide personalised advice tailored to your unique circumstances. Our team takes the time to understand your current and future financial needs, helping you identify whether term assurance or whole of life insurance is the best fit for you.
Expert Advice from Chartered Financial Planners
Our expertise extends to both short term and long term protection planning. Whether you need cover for a specific period, such as paying off a mortgage, or a lifetime solution for estate planning, we’ll ensure your policy aligns with your goals.
Nationwide Service
Although we are based in the Midlands, we proudly serve hundreds of clients across the UK. With our extensive experience and five-star reviews, you can trust us to provide professional and reliable advice, wherever you are located.
Making the Right Decision for Your Needs
Here are a few questions to consider when deciding between term assurance and whole of life insurance:
- What are your protection needs?
- Do you need cover for a specific period or lifelong protection?
- What is your budget?
- Can you afford the higher premiums of a whole of life policy, or is a term assurance plan more suitable?
- Are you planning for inheritance tax?
- If estate planning is a priority, a whole of life policy may be more appropriate.
- What other financial products do you have?
- Your existing savings, investments and pension plans may influence your decisions.
Speak to Our Team Today
At Howard Wright Financial Planning, we understand that life insurance is a crucial part of your financial journey. Our Chartered Financial Planners are here to provide clear, unbiased advice to help you make an informed decision.
Planning your retirement doesn’t have to be daunting. At Howard Wright, we’re here to make the process simple, clear, and stress free. Call us today on 0345 688 4939 or complete our 20-second enquiry form below to arrange a free consultation. Let us guide you towards the right protection solution for you and your loved ones.
Disclaimer: The information provided in this blog is for general guidance only and does not constitute financial advice. Policies and premiums will vary depending on individual circumstances. It is essential to seek personalised advice from a qualified professional before making any decisions about life insurance. Howard Wright Financial Planning is authorised and regulated by the Financial Conduct Authority.