Whole life insurance is a way of leaving a lump sum for your family or dependents when you die.  It may also be used in inheritance planning so that you do not leave a large tax bill for those who inherit your estate.  It may also be used to pay your funeral expenses.  Whole life insurance may be single cover, joint cover, or dual cover.

Whole life insurance is available as guaranteed whole of life insurance, reviewable life insurance, whole life insurance benefit purchased as part of a term life insurance policy, or as Section 72 life insurance.

There is a newer type of life insurance available, Royal London’s Life Changes Option,  which allows you to stop paying premiums after 15 years or more, and receive either a reduced payout on your death or receive a cashback payment at the time you stop paying premiums.  The proportion of cashback payment or reduced death benefit depends on the amount of payments you have made.

Reviewable whole life insurance is a type of policy which has an investment element as a proportion of the life insurance element of your policy.  In this case, your premiums are not fixed.  You will be faced with a review of your cover periodically.

It is very important to note that if the investment portion is no longer sufficient to cover the cost of your whole life policy then you will be faced with increased premiums or a reduced level of pay out.  This may be later in life when alternative life insurance policies are much more expensive to purchase due to your age or any health issues you  may have developed.

Guaranteed whole life insurance is whole life insurance which pays a fixed amount when you die for a fixed monthly premium.  The amount of benefit paid when you die is fixed at the outset of the policy and so are the monthly premiums.  You must continue to pay premiums as long as you live for this protection to remain in place.  

This type of insurance can be used to leave a fixed amount to your family or beneficiaries when you die or could be used to pay for funeral expenses, depending on the amount of benefit you choose.  It pays a tax free lump sum on your death.

Section 72 life insurance is a specific, tax deductible, form of life insurance that you can put in place in order to avoid your family or beneficiaries paying inheritance tax ( also known as capital acquisitions tax or capital gains tax ) on any bequest or assets which you leave them when you die.

This form of life insurance must be taken out by the person who is planning to leave the inheritance and the benefit must be used to pay inheritance tax.  

Inheritance tax can be relatively high in Ireland.  Although a spouse or civil partner is exempt from inheritance tax,  a son or daughter is not and inheritance tax is higher again for siblings, nieces/ nephews, or any friends to whom you may wish to leave an inheritance.  With rising house prices, leaving a family home, savings, or investments to your family members may leave them with a significant tax bill.  

Section 72 life insurance is a way of ensuring that anything you leave to your family or others will not be subject to inheritance tax.  If you wish a family member to stay in the family home, or maybe have a holiday home to leave to your children to share, Section 72 life insurance is a way to ensure that such an asset could remain in their possession.

Single life whole life insurance covers the life of the policyholder only.  When benefit has been paid on their death the policy will cease.

Joint life whole life insurance covers the life of two policyholders and pays out on the death of one of the policyholders, usually on the first death.

Dual life whole life insurance pays a lump sum on the death or both of the policyholders.  It will pay a benefit on the death of the first policyholder, then cover will continue and it will pay out another benefit on the death of the second policyholder.