Whole of life insurance

Taking out whole of life insurance means you could financially protect your loved ones no matter when you die. Find out more about over 50s life insurance as a form of whole of life cover. Call 0808 141 1336 to talk to our helpful advisors at Assured Futures.

Written by

Anna McEntee

Insurance comparison expert

Reviewed by

Faith Archer

Insurance expert

Last Updated

6 FEBRUARY 2023

9 min read

What is whole of life insurance?

Whole of life insurance – sometimes called whole of life assurance – is a type of policy that guarantees an insurance provider will pay out a lump sum to your family when you die, whenever that might be. It does what it says on the tin and covers the whole of your life, provided you’ve continued to pay your premiums. 

This is different from term life insurance, which only pays out if you die during the set period of time the policy runs for. If you die after a term life insurance policy finishes, your nearest and dearest won’t get any pay-out, regardless of how much or how long you may have paid premiums.

How does a whole of life policy work?

With whole of life insurance, you’ll pay a monthly or annual premium. You’ll need to weigh up whether to go for reviewable or guaranteed premiums.

Reviewable premiums are often low to start with, but insurance providers can review your payments – usually pushing them up.
Guaranteed premiums may be more expensive to start with but remain the same throughout the policy term.

When you die, your beneficiaries (that is, the person or people you’ve named on the policy) will get a pay-out. You’ll remain covered so long as you keep paying the premiums. 

There are some whole of life policies where you only have to pay for a fixed number of years or until you reach a set age – for example, 90. You’ll still be covered until you die, but you won’t have to pay anything after the fixed period ends.

What types of whole of life policy are there?

There are three main types of whole of life cover:

Over 50s guaranteed acceptance cover – geared to people over 50, this type of cover doesn’t involve medical questions and every applicant is accepted. This could be useful for those with health conditions or who want to cover funeral costs. Be warned, depending on the policy, you might not be covered for 12 or 24 months after signing up.
Whole of life pure protection – again, this cover lasts for life, but insurance providers will check your medical history when considering your application. This makes it suitable for people in good health, but others may be rejected for cover.
Whole of life investment-linked – there are two types of investment-linked policies. With-profits policies see insurance providers invest your premiums with the aim of making enough return to cover the eventual pay-out. With a unit-linked policy, you choose the unit-linked investment funds you want to buy with your premiums.

Comparethemarket only compares over 50s whole of life cover, as other types of whole of life insurance are more complex and require expert advice. If you’re interested in whole of life insurance, our specialist partners Assured Futures can help you find the right policy for you. Call Assured Futures on 0808 141 1336.

We can also help with level term insurance and decreasing term insurance.

How much does whole of life insurance cost?

Whole of life insurance is usually more expensive than term cover because insurance providers know they’ll definitely have to pay out at some point.

As with other types of life insurance, different factors can affect the cost of your premium. These include your:

Cover level – the more you want your beneficiaries to receive, the more you’ll have to pay
Age – the younger you are when starting your policy, the cheaper it’s likely to be
Medical history – whether you have any existing health conditions
Lifestyle – for example, if you smoke
Occupation, particularly if you’re still working.

You’ll need to keep paying your premium until you die (or reach an advanced age), so consider whether you can afford to keep paying after you retire.

How much could a policy pay out?

The sky’s the limit – but if you want your loved ones to receive a big pay-out, you’re likely to have to pay big premiums. The size of the lump-sum payment will depend on the specific details of your policy.

If you opt for a with-profits or unit-linked policy, the size of the pay-out could be more or less than planned, depending on how well the investments perform.

Is a whole of life insurance worth it?

A whole of life policy could be worthwhile for you if:

You want to leave your family a lump sum when you die
You want a pay-out that could help cover an inheritance tax bill
You want to cover funeral costs, leave a legacy or help replace a partner’s lost pension
You’re willing to pay potentially hefty premiums, which – depending on the policy – could increase in future.

However, you might only want cover as financial security for a certain length of time, for example, while you still have a mortgage or your children are still young enough to depend on you financially. If so, you may find a term life insurance policy more suitable.

If you’re considering a whole of life policy, it’s a good idea to speak to a financial advisor to check it’s right for you and so you can understand the risk of any investments the policy uses and how the pay-out could vary. Our partners Assured Futures can help. You can call them on 0808 141 1336.

Some whole of life policies charge fees if you end your cover early, so again, it’s a good idea to seek advice on this.

Is a whole of life insurance pay-out tax-free?

The good news is that when your family receive a lump-sum pay-out after your death, they won’t have to pay capital gains tax or income tax on it.

But they may have to pay 40% inheritance tax if the value of your estate tots up to more than the inheritance tax thresholds.

You can protect your life insurance pay-out from inheritance tax by keeping it separate from the rest of your estate by putting the policy in trust.

Is whole of life insurance guaranteed to pay out?

As long as your cause of death is covered under the policy’s terms and conditions, you’ve told the truth on your applications and you don’t miss any payments, the pay-out should be guaranteed.

It’s important to check which causes of death are covered before taking out a policy. Insurance providers have their own terms and conditions, along with different exclusions and limitations. In nearly all cases, you’ll find that death resulting from alcohol or drug abuse won’t be covered.

Can I cash in my whole of life insurance policy early?

Some investment-linked policies let you cash in early and receive a smaller pay-out before you die. However, you may face high charges and a penalty. You might get back less than you’ve invested.

Just make sure you read the terms and conditions carefully and are aware of how much you may lose if you decide to cash in early.

Should I get term or whole of life insurance?

The big attraction of whole of life insurance is the guaranteed pay-out. It means you know that your loved ones will receive a cash payment when you die, whenever it happens. The downside is that this usually means paying higher premiums.

But if you live to a ripe old age, you might find your loved ones no longer need such a big pay-out. Their financial position might have changed and you may have paid off your mortgage. Your other half could have a pension to rely on and your kids might have jobs of their own.

If you only need financial protection for a limited time, term life insurance can provide that cover. It’s designed so that any pay-out can cover financial commitments, such as a mortgage or other debt, if you die during the period while the policy is running.

As this type of insurance covers a fixed period, your monthly premiums are usually lower.

You may be able to cut premiums further by choosing a decreasing term insurance policy, rather than a level term version. The pay-out for this type of cover goes down over the policy term, but this can work well if you want the pay-out to cover the balance on a repayment mortgage.

Learn more about the different types of life insurance and how they work.

Can I get a joint whole of life insurance policy?

You can, but not with Comparethemarket.

A joint policy is for two people but will only pay out once, after the first person dies, leaving the second person uninsured.

Premiums for a joint policy are likely to cost less than buying two separate single policies, but do consider if joint life insurance would suit your needs better.

Can I get whole of life insurance if I’m in poor health?

It’s possible to find whole of life cover if you have a pre-existing medical condition, especially if you’re eligible for over 50s guaranteed acceptance life cover. You’ll pay a little more and there’s a 12 or 24-month waiting period before you can make a claim, but everyone is accepted regardless of their health status. If you die within the waiting period, the insurance provider will return the premiums you’ve already paid, but once the waiting period is up you’re fully insured.

Top tip

Always be honest about your health and lifestyle habits when applying for life insurance. If you don’t disclose important health information and your insurance provider finds out, they might cancel your policy.

How can I get whole of life insurance quotes?

You can buy over 50s life insurance through Comparethemarket.

If you need advice, or if you’re interested in other types of whole of life insurance quotes, our life insurance partner Assured Futures can help you.

Give the friendly team a call on 0808 141 1336.
Lines are open:
Monday to Thursday: 9am-8pm
Friday: 9am-5pm
Saturday: 10am-2pm
Sunday: Closed

For all other life insurance advice, read our guide or contact our partner LifeSearch, a specialist advisor for life insurance, on 0800 072 1147.

Lines are open:
Monday to Friday: 8am-8pm
Saturday: 9am-2pm
Sunday: 10am-3.30pm