Each insurance provider will have their own terms and conditions. Platinum Financial Consulting deal with all the leading providers in the UK. If you ask us to place insurance on your behalf, we will make sure we use the provider whose terms and conditions best meet your needs.
The information we provide below is therefore not necessarily the terms and conditions you will be offered. They are simply a generic outline of the conditions offered by most providers and are provided as a guide to better aid your understanding.
Who can own the insurance policy ?
How long can the policy term last ?
When will the policy pay out ?
Are there any events when the policy would not pay out ?
How much will be paid out ?
How much will it cost ?
Are there any other benefits I can add to my policy ?
Can I increase the amount of benefit I receive from the policy ?
Will I get any money back ?
Who can own the insurance policy ?
Most people who own an insurance policy are also the individuals who are insured on the policy. However it is possible to own a policy on anybody in whom you have an "insurable interest". This means that if your life or finances would be directly affected should something major happen to somebody you are involved with, you can take out a policy on them.
Obvious examples are:
Husbands, wives and partners
Business partners
Parents
Key employees
Policies can either be owned singularly or jointly.
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How long can the policy term last ?
Once taken out, a whole of life policy has no specific term. As long as you maintain the policy by paying the premiums, the policy will pay out if the insurable event occurs.
The insurance company will normally put restrictions on the age when such policies can be taken out. Typically people younger than 16 and older than 80 cannot apply for whole of life insurance.
Different insurance companies have different conditions. Please feel free to ask Platinum to research your best options.
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When will the policy pay out ?
The policy will pay out if the insurable event occurs. This means that if you insured yourself against critical illness and you suffered a heart attack, then the policy would pay out no matter how old you were.
The policy will normally cease at this point, once a claim has been made. This is typically the case even if you had several events insured in one polic, for example a husband and wife insuring each other against death or critical Illness.
It is possible to buy a policy that would continue to offer insurance even if a claim against it has already been made.
Platinum are able to provide all types of policy, please talk to us if you are any way uncertain.
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Are there any events when the policy would not pay out ?
Most of the things that could stop the policy paying out are in the hands of the applicant.
The policy would not pay out if:
- it was discovered you were not truthful with all the information you provided either at the time of application or claim
- if you stop paying the premiums or your premiums are in arrears
- if it were considered that you were in anyway culpable for bringing on the insurable event.
Suicide may not be covered by some life insurance companies.
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How much will be paid out ?
The sum assured will normally be paid in full.
If your policy has an investment element then you would either receive the sum assured or the investment amount if it were greater than the sum assured.
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How much will it cost ?
Most insurance quotes are given based on standard rates. This means that the premium quoted will be based upon obvious factors such as your sex, age, occupation and whether you smoke or not. Because the quote is not based on any medical underwriting, it cannot be guaranteed.
On application, the insurance company will fully assess your application including any medical reports or tests as necessary.
Once the policy has been underwritten, the insurance company will issue formal terms to you, including the monthly premium. Whether the premium remains the same will depend on the type of policy you have selected.
A guaranteed premium is exactly what you would expect, namely the monthly premium will be the same throughout the life of the policy.
A reviewable policy will start out with an initial premium (normally cheaper than the guaranteed premium), but after a certain period the insurance company will review the policy. At this point they could adjust the premium you are required to pay.
This is where it gets confusing !
Some policies will have an investment element attached to them. These policies will have a lower premium level that you could pay, and an upper premium level.
The lower premium amount is typically called “maximum cover”. This is a difficult concept to grasp, but simply it means that it allows you to obtain the maximum amount of cover you require for the lowest initial premium.
The problem with this cover is that the premium is only guaranteed for 10 years. After this point you will either have to increase your premiums and or decrease the level of cover in the policy.
The higher premium amount is called “standard cover”. This means that the insurance company feel this is the correct premium to keep the policy in force for the whole of your life. It should be remembered that some insurance companies will guarantee the standard cover price, whilst others will still review it.
Please contact Platinum Financial if you need a further explanation of this concept.
Ideally you should choose a policy that allows you to set the premium between the maximum and standard cover levels. This allows you to initially have the level of cover you require in line with your budget. A policy that has an investment element is a reviewable policy.
It should be remembered that as this policy is intended to run for your entire life, premiums could rise in the future. Therefore the difference between the maximum cover premium and the standard cover premium represents the amount that goes into the investment element. This amount is used to pay for premiums in future years.
The insurance company assume that if you pay the standard cover premium, future premium increases can be kept to a minimum or possibly not increased at all.
If you set your premium towards the maximum cover end of the scale, then it is likely that in order to keep the policy in force, you will have to pay increased premiums as you get older.
If at some point in the future you are unable to pay the premium then the policy will lapse, or use up any money that is in the investment element to pay the premiums and then lapse once the investment element runs out.
If you want to protect the policy against the impacts of inflation, or have other reasons to gradually increase the value of the policy, you could choose to “index” the policy. This means that each year the benefit will increase in line with a known index such as the Retail Price Index (RPI) or an agreed percentage. With an indexed policy, both the benefit and the premium will increase year on year.
There will be other charges for administration and running of the policy. These are included in the monthly premium. You will be able to see details of these charges in the illustration we provide to you.
The insurance company will also pay Platinum Financial Consulting a commission for introducing the business and providing you with advice. We are keen to stress that this does not make it more expensive for you to deal with us. In fact, as recognised independent financial advisers, some insurance providers give us preferential rates.
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Are there any other benefits I can add to my policy ?
Most whole of life policies will allow you to add several benefits to your policy; obvious examples are Life and Critical Illness insurance. There are however some additional benefits offered by some providers that may be of interest to you:
Waiver of Premium
This benefit will continue to pay the premiums on the policy should you be in a position where you are unable to work due to accident or illness for a defined period (typically 6 months). The premiums will continue to be paid until you recover, or the policy term lapses, or you reach a specified age, typically 60.
Flexibility
It may be that as you get older your insurance needs change. When you are young, you may be more interested in making sure you can meet your liabilities should you be unable to work due to accident or illness. Therefore you may want your policy to contain income protection benefits and critical illness and disability insurance.
As you get older and your children leave home and your liabilities decrease, you may be more concerned about ensuring that your partner receives some cash upon your death or that you are insured against the cost of long term care provision.
Some whole of life polices will allow you to switch the benefits of the policy as you wish.
Whilst this is a nice feature, you should remember that different benefits will have an impact on the premium and could affect it both positively and negatively.
Also, the way the policy is underwritten may limit the amount of benefit you receive in any particular area.
Platinum Financial are more than willing to help you select a policy and benefits that best meet your needs.
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Can I increase the amount of benefit I receive from the policy ?
The sum assumed is set and underwritten at the outset of the policy. If you decide that you simply want to increase the level of cover for personal reasons, it may be difficult to do so using your existing policy without further underwriting.
Many insurance providers will allow you to increase the level of cover if certain events occur in your life, without the need of further underwriting. This is known as a “Guaranteed Increase / Insured Option”
The increase will be restricted to certain limits, but it will nevertheless give you some of the increased cover you require.
Typical events are :
Marriage
Becoming a parent or having another child
Moving home
A proveable increase in your personal liabilities, such as inheritance tax liability
A proveable increase in your business liabilities, such as an increase in your share of a partnership
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Will I get any money back ?
Whole of life policies that have an investment element to them may, over time, start to accrue a value. This cannot be guaranteed.
This value is knows as the surrender value and it is the amount the insurance company will give you (less any administration costs) if you decide to cancel the policy.
Some insurance companies will let you take some of the surrender value of the policy and still keep it in force. They may do it in the form of a loan.
It should be remembered that the investment element was to be used to help absorb future premium increases, and you may find that you will have to fund large premium increases in the future if you wish to keep the policy in force.
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These notes are intended as a guide only.
Upon application, we will make sure we are aware of your requirements and inform you of the terms and conditions of the selected provider before the policy comes into force.
If you think these notes are incomplete or misleading in anyway, please contact us immediately.
