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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 Howden Life & Health.

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 Howden Life & Health.

Written by
Tim Knighton
Life, health and income protection insurance expert
Reviewed by
Faith Archer
Insurance expert
Last Updated
6 OCTOBER 2023
8 min read
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What is whole of life insurance?

Whole of life insurance – often 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 type of insurance is different from term life insurance, which is only designed to pay out if you die during the set period 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’ve paid your premiums.

How does a whole of life policy work?

With whole of life insurance, you pay a monthly or annual premium. You should be covered by the policy so long as you keep paying the premiums.

You need decide whether to pay 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.

You might want to consider writing your life insurance policy in trust, to make sure any pay-out when you die goes to your beneficiaries (the person or people you name). Otherwise, the pay-out is likely to become part of your estate and could be used to pay any inheritance tax or outstanding debts.

There are some whole of life policies where you only 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. It could be useful for those with health conditions or who want to cover funeral costs. Depending on the policy, you might not be covered for 12 or 24 months after signing up.
  • Whole of life pure protection – this cover lasts for life, provided you keep paying the premiums, but insurance providers will check your medical history when considering your application. This makes it more suitable for people in good health.
  • Whole of life investment-linked – there are two types of investment-linked policies.
    • With-profits policies: providers invest your premiums with the aim of making enough return to cover the eventual pay-out.
    • Unit-linked policies: allow you to 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 Howden Life & Health can help you find the right policy. Call Howden Life & Health on 0808 141 1336.

Compare the Market can help you compare level term life insurance and decreasing term life 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. Depending on the type of policy you take out, these could include your:

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

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

How much could a policy pay out?

If you want your loved ones to receive a large pay-out, you’re likely to have to pay higher 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 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, if you only want cover as financial security for a certain length of time, 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 the right option for you. They’ll also help you understand the risk of any investments the policy uses and how the pay-out could vary.

Our partners Howden Life & Health can help. You can call them on 0808 141 1336.

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

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

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 adds up to more than the inheritance tax thresholds.

You can protect your life insurance pay-out from inheritance tax 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. Depending on your policy, your premium payments may stop at a certain age, for example, 80, 85 or 90. Even if your payments stop after this age, your policy should still pay out when you die.

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.

Be sure to read the policy terms and conditions carefully so you’re 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. You know your loved ones should receive a cash payment when you die, whenever that happens. The downside is that this usually means paying higher premiums.

If you only need financial protection for a limited time, then consider term life insurance. It’s designed so that any pay-out can cover financial commitments, such as a mortgage, if you die while the policy is running. As this type of insurance covers a fixed period, your monthly premiums are usually lower.

Term insurance Whole of life insurance
Typically cheaper Usually costs more
Pays out only if you die during a set period of time Guaranteed pay-out when you die
May be suitable if you want to support your loved ones until a certain time in their lives May be suitable if you want to support your loved ones at any time in their lives
Doesn’t include option for investments May include investments that can be cashed in (Compare the Market don’t offer these products)
You pay premiums as long as your policy lasts May only require you to pay premiums up to a certain time

You may want to consider decreasing term life insurance, where the pay-out goes down over the policy term. This type of cover is often taken 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 Compare the Market.

A joint life insurance policy is for two people but it only pays out once, after the first person dies, leaving the surviving person uninsured.

Premiums for a joint policy are likely to cost less than buying two separate single policies, but do consider whether two separate life insurance policies may be a better option for your circumstances.

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, but it might cost you more and there could be less providers willing to insure you.
If you’re over 50, you might want to consider over 50s life cover. You’re guaranteed to be accepted, regardless of your health status. Compare the Market can help you compare this type of cover.
There’s typically a 12 to 24-month waiting period before you can make a claim. If you die within that time, the insurance provider will return the premiums you’ve paid but won’t make a full pay-out.

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 Compare the Market. If you’re looking for another type of whole of life insurance policy, you’ll need to look for a specialist provider.

If you need advice, or if you’re interested in other types of whole of life insurance, our life insurance partner Howden Life & Health 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, 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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Tim Knighton - Life, health and income protection insurance expert

"The fact that over 50s life insurance offers guaranteed acceptance is a huge benefit. You don’t need to worry about passing any health checks and you can make sure your beneficiaries are looked after. Just make sure that you plan for inflation, otherwise you might leave your loved ones short when they need" 

Learn more about Tim

Faith Archer - Insurance expert

Faith Archer is an award-winning money journalist, previously Deputy Personal Finance Editor at The Daily Telegraph and now a columnist at Yours and blogger at Much More With Less. Faith aims to make money matters easier to understand, with practical tips on everything from household bills and family budgeting to investments, pensions and tax.

Learn more about Faith