Most people purchase life insurance cover via a Term Assurance policy providing cover for the term of the policy. At the end of the term, the policy ceases and no more cover is in place. This suits those who need the insurance for a specific term of years to cover such events as the repayment of a mortgage if the mortgage holder dies early or to the family if the breadwinner dies during the dependency years of children.
Some people need life cover that will pay out when the insured person dies to pay death duties, etc., and this is called whole of life cover. However the cost tends to be high and stopping premiums before death will result in the loss of the cover and of the premiums paid.
Until now, the only alternative has been a unit linked whole of life policy. This type of policy is cheaper than the whole of life policy at outset but gets progressively more expensive as you age. For people who live longer, there is a high probability of being unable to afford the cover at older ages. This fundamental uncertainty takes away the traditional peace of mind insured persons enjoy when they know they are fully covered against death.
Now, Royal London has introduced a traditional whole of life policy with a difference. It offers the traditional whole of life cover with a fixed premium payable from outset and throughout life. Equally the life cover remains fixed and guaranteed to be paid out on death.
It differs from competitors by introducing two options to those who have held the policy for 15 years or more and who wish to stop making contributions. You can continue to be insured for a proportionate amount of life cover without payment of premiums for the rest of your life or you can request a refund of 70% of all the contributions you have made to date at which time all life cover will cease.
You should consult your financial broker for full details of all the features of this policy.