Whole of life insurance

Take out whole of life insurance and help protect your loved ones financially, no matter when you die. Over 50s life insurance is a form of whole of life cover. Talk to our helpful advisers at Assured Futures by calling 0808 141 1336. 

Take out whole of life insurance and help protect your loved ones financially, no matter when you die. Over 50s life insurance is a form of whole of life cover. Talk to our helpful advisers at Assured Futures by calling 0808 141 1336. 

Faith Archer
Insurance expert
7
minute read
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Last Updated 3 OCTOBER 2022

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 might have paid premiums.

How does whole of life cover work? 

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

  • Reviewable premiums may start out lower, but insurance providers can review them from time to time and revise the amount you have to pay – usually pushing it up.
  • Guaranteed premiums stay the same through the whole policy, but may well start out distinctly more expensive.

When you die, your beneficiaries (that is, the person or people you’ve nominated 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? 

The three main types of whole of life cover are: 

  • Over 50s guaranteed acceptance cover – specifically for people aged over 50, this type of cover doesn’t involve medical questions and every applicant is guaranteed to be accepted. This can make it suitable for covering funeral costs and for those with health conditions. However, there is usually a 12 or 24-month waiting period before a claim can be made.
  • Whole of life pure protection – again, this cover lasts for the whole of your life but insurance providers will look at your medical history when they consider your application. For this reason, it can be suitable for people with a good health record, but others may find themselves rejected for cover.
  • Whole of life investment linked – there are two types of investment-linked policies. With-profits policies involve the insurance provider investing the money from 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. 

Compare the Market 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.

Like other types of life insurance, the price of your premium can be affected by many things: 

  • The cover amount – this is likely to be the main factor, as you decide how much of a pay-out you’d like your beneficiaries to receive
  • Your age – typically, the younger you are when you start your policy, the cheaper it will be
  • Any existing health conditions
  • Your medical history and your lifestyle – for example, if you smoke
  • Your occupation, particularly if you’re still working.

Because you’ll need to pay your premium until you die, or reach an advanced age, do consider whether you can afford to keep paying once you stop working.

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 policy right for me? 

A whole of life policy could be right 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 might 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.

Advice is also important because some whole of life policies levy significant charges if you want to end your cover early.

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. 

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

If you want to protect your life insurance pay-out from inheritance tax, you can keep it separate from the rest of your estate by writing the policy in trust.

Is whole of life insurance always 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 you take out a policy. Cover can vary among providers and some may have different exclusions and limitations. In nearly all cases, you’ll find that death due to 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 might 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, so you’re safe in the knowledge that, whenever it happens, your loved ones will get a cash benefit when you die. This does mean you typically pay higher premiums.

 

However, if you live to a ripe old age, you may find your loved ones no longer need a big pay-out as their financial situation has changed. You might 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 any pay-out can be used to cover financial burdens, like a mortgage or other debts, 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 during the policy. It’s a popular option if you want the pay-out to cover the outstanding 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 Compare the Market.

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 over 50 and buy over 50s guaranteed acceptance life cover. You’ll pay a little more and there’s a 12 or 24-month waiting period to 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 paid, but after the waiting period 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 may cancel your policy.

How can I get whole of life insurance?

You can buy over 50s life insurance through Compare the Market.

If you need advice, or if you’re interested in other types of whole of life insurance, 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

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