What is whole life insurance?

Basically, a whole life insurance policy offers a lump sum payout upon your death, regardless of when that occurs. In contrast to term life insurance policies, which only pay out if you pass away during the specified term, a whole life policy does not expire after a set number of years. This type of coverage remains in effect until your death, at which time a claim can be filed and the designated beneficiaries receive the predetermined death benefit amount.

While whole life insurance may seem intricate, once you have determined your needs, arranging it should be straightforward. It is crucial to ascertain the required amount of money for your beneficiaries and who should be the recipients.

Determining the necessary life insurance coverage hinges on the underlying reason that prompted your consideration of life insurance.

The purpose should be clear to you but here are some common reasons for choosing a whole life insurance policy:

• Funding an inheritance tax bill

• Paying for your funeral

• Leaving a legacy

Your own specific needs may be different or they may be a combination of the above. Either way, working out how much money will be needed when you die is vital. It is usually simplest to look at each of your requirements individually before you combine them and you can do this yourself, rather than using a complex online whole of life insurance calculator.