I come across a lot of things when carrying out financial reviews with clients. When conducting a thorough inspection of their current cover, I often come across various policy types, from the well recognised mortgage protection plans to the lesser known, but increasinggly popular, mortgage convertible policies now on offer. However a common policy type that I still encounter is the dreaded Whole of Life policy.
It is generally with clients above the age of 50, although not always. These plans were often sold by the local door to door insurance man who I’m sure you can recall knocking on a weekly basis to collect premiums from your parents or grandparents, (a selling practice no longer permitted under the Consumer Protection Code) and are policies produced by some of the largest life insurance companies in Ireland.
Basically the Whole of Life plan works as follows;
1. Client pays a monthly premium into the policy for a specified sum assured, e.g €40 per month for €300,000 of life cover and €50,000 of specified illness cover
2. A proportion of the clients premium is used by the insurance company to cover the cost of the client, a smaller portion of it went towards a savings plan type element built into the policy. The hope for the client was that they’d be insured for an amo