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Whole of life Assurance Plan

A whole of life assurance plan will pay out a sum assured on the death of the life, or lives, assured no matter when it occurs. The sum assured may be paid out either on diagnosis of a critical illness or death. Some plans may pay out on both events.

Whole of life contracts are normally written on one of three bases:


Standard Sum Assured
This basis is designed to provide a level of sum assured that a particular premium can sustain indefinitely, although there is no guarantee, provided the investment return assumptions are met or exceeded. These policies may acquire a cash value in later years but should not be regarded as ‘savings plans’.

Maximum Sum Assured
This basis provides the highest sum assured for a particular premium but the premium will be reviewed after a specified period, normally 10 years, usually resulting in a substantial increase to the premium or a decrease to the sum assured. There is usually little or no investment element to these plans. 

Guaranteed Premium
This basis provides a guaranteed level of sum assured and has no investment element. Policies arranged on this basis will not acquire a cash in value at any point.

Permanent Health Insurance

This is a policy which pays a specified amount, usually on a monthly basis, to replace the loss of income due to a person not being able to work because of illness or injury. The benefit may be paid after a specific period ranging from 1 day to 52 weeks, and is only paid for a designated term, usually until retirement. Sometimes this type of plan has an investment element but the plan should not be viewed as a savings plan.

Private Medical Insurance

This provides cover for an insured person, together with their family perhaps, to pay hospital and treatment costs for operations and procedures undertaken in private hospitals. Sometimes policies will pay cash benefits to the insured if treatment has been accepted under the National Health Service. 

Critical Illness cover

This type of insurance may be effected using either a term assurance plan or a whole of life assurance. The benefits are designed to be paid to the applicant upon diagnosis of a critical illness such as a heart attack, cancer or stroke etc. The benefit can either be paid out as a lump sum or as family income benefit as a regular income payment.

Accident Sickness and Unemployment Insurance

These policies are designed to supplement income in the event of the insured being unable to work for a period due to an accident, sickness or being made redundant. Generally the benefit will only continue for a period of either 12 or 24 months.

Level Term Assurance

This is a policy which will pay out a specific sum assured if the life, or lives, assured die before a specific expiry date. The sum assured does not usually vary during the term of the policy.

Decreasing Term Assurance

This is a policy which will pay out a sum assured if the life, or lives, assured die before a specific expiry date. The sum assured will decrease by a stated amount each year although the premiums will remain constant.

Gift Inter Vivos 

Gift Inter Vivos is a form of term assurance to cover the potential Inheritance Tax Liability (IHT) that can be created when someone gives away a large sum of money (Potentially Exempt Transfer). Gift Inter Vivos lasts for a fixed 7-year period and decreases in line with the (IHT) liability it is covering ( in other words Gift Inter Vivos provides level cover for the first 3-years and then deceases to nil over the next 4-years.

This summary in no way constitutes a complete explanation of the protection products detailed above, or how they may suit you. For further details of protection plans and how these may help your personal circumstances please seek independent financial advice.

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