Whole of life
Whole of Life Insurance
Whole of life cover guarantees that the insurer will pay out a lump sum to your loved ones whenever you die, rather than within a specified time frame.
Another commonly used name for this type of policy is whole of life assurance.
How whole of life insurance works
Whole-of-life insurance is designed to last as long as you do. You pay in a premium every month and when you die, the policy pays out a lump sum to your loved ones.
As long as you continue paying your premiums, the policy will pay out on your death, whenever that is.
What you need to know
The difference between whole-of-life insurance and term insurance is that term insurance only runs for a set period. With term insurance you select how long you want the term of the policy to last when you get a quote, for example 25 years.
If you die in that time, it pays a tax-free cash lump sum to your loved ones, but if you live beyond the term, your plan has no cash-in value.
As you will see when you compare life-insurance quotes, term insurance is a lot cheaper than whole-of-life cover, which is why so many more people take it out.
Who needs whole-of-life insurance?
There are a number of reasons someone might choose to take out a whole life insurance policy.
A parent whose child has some form of disability might decide to take out a policy to ensure their offspring can afford care once they’re on their own.
Sometimes, wealthy individuals who plan on leaving a significant estate might decide to take out a whole of life policy that would cover the inheritance tax bill. That way, their heirs can receive the full amount.
There could be many other reasons why a whole life policy is right for you; it depends on your own particular circumstances.
It could even be that the life insurance policy is seen as an investment vehicle, to ensure there’s an inheritance for any heirs.
Our website offers information about investing and saving, but not personal advice. If you’re not sure which investments are right for you, please request advice, for example from our financial advisers. If you decide to invest, remember that investments can go up and down in value, so you could get back less than you put in.