Whole of Life — How is my price calculated?

Whole of life insurance is a popular form of protection which covers your life without an end date meaning you’re insured whether you pass away when you’re 70 or 107. It’s a popular option when written into Trust for those looking to offset inheritance tax liabilities and for those looking for protection against the cost of funerals.

It’s important to understand how whole of life cover is priced so you can ensure that you’re protected for a sufficient lump sum but at a cost that you consider to be affordable.

If you take out a whole of life policy then the insurer providing the cover knows there will come a time when they have to make a lump sum pay-out to your estate. On this basis, the insurer will want to know you’re healthy when you take out the cover. The longer you live, the longer you will pay premiums towards your whole of life policy.

There are circumstances under which the insurer may increase the original whole of life premium you’ve been quoted before agreeing to take you on as a customer:

High BMI:

Something that life insurance companies are looking at with increasing regularity is body mass index (BMI). If you have a high BMI you may face an additional premium when you take out your policy. Some insurers will begin to increase premiums if you have a BMI above 32. They may add between 25% and 100% to your original premium leaving it up to you to accept or decline the terms they offer. Some insurers are more tolerant than others when it comes to BMI premium increases. If you’ve already got a policy in place which has a “loaded” premium but you’ve recently lost weight through diet or exercise then it could be worth reviewing it to see if you could now secure yourself a cheaper whole of life insurance premium.

Smoking Status:

It goes without saying that on average, smokers live shorter lives than non-smokers. Insurers take this into account when offering you a price for a whole of life policy. On this basis, smokers will pay around 50% more than non-smokers when applying for whole of life cover. If you took out a whole of life policy as a smoker but you’ve now quit and haven’t smoked for over 12 months then it’s a good idea to review your cover and see if you can secure yourself a cheaper premium.

Adverse Medical History:

If you apply for whole of life insurance and disclose any serious medical conditions then the insurer will likely write to your GP to clarify the info on your medical records before they offer you cover. As whole of life insurance offers a guaranteed lump sum pay-out it’s important that the insurer knows the ins and outs of your medical history. Once they’ve received the required info from the GP they may offer your standard terms, which is the original price you were quoted. They may also “load” the premium, increasing it based on the additional risk based on your medical history or they may even decline your application if they deem you too high a risk to insure for the rest of your life.

If you’re concerned about how much you’ll end up paying for whole of life insurance then you can speak to an FCA regulated broker. A good broker will be able to “pre-underwrite” your application based on your medical history and provide you with an estimated premium tailored to your circumstances.

Our team of consultants are on hand to answer your questions and guide you through the whole of life application process from start to finish. You can call them free of charge on 0808 281 9393.