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Whole of life insurance is a type of policy that guarantees an insurance provider will pay out a lump sum to your loved ones when you die, rather than within a fixed time frame. This cover is often called whole of life assurance. The term ‘assurance’ means that the policy guarantees to pay out upon death, and ‘whole of life’ insurance is typically the main assurance product.
When you take out a whole of life policy, you usually pay a premium on a monthly or annual basis. An insurance provider takes some of your payment to pay for the policy, and invests the rest. You’ll remain covered as long as you pay the premium.
As this policy type usually involves an investment approach, it can be more complex. Therefore, if you’d like to learn more about this subject, read our guide explaining the differences between whole of life cover and life insurance.
The two main types of whole of life cover are:
It’s worth noting that there are also whole of life plans that charge a fixed premium for a set amount of cover. You’ll know up front how much a policy costs, how long it will run for, as well as the sum you’ll get as a pay-out.
Your lump sum payment, which is tax-free, will depend on the specific details of your policy. Each policy is different and so will be the size of your pay-out. Sometimes, you can choose to stop paying once you’ve reached a certain age. In other cases you’ll keep making monthly or yearly payments until you pass away. Whole of life cover can also be set up in a trust – in this instance a pay-out would be made to the trustees, who’ll be in charge of distributing a sum to any beneficiaries.
Once you’ve thought about a plan, it’s time to decide if a whole of life insurance policy is for you. Whichever policy you go for it’s crucial that you’re aware of any exclusions and limitations, so that you fully understand what you’re signing up for and your loved ones won’t be left with less than you expect.
We don’t offer whole of life insurance as a standalone policy, so you may need to speak to a specialist or shop around to get this type of policy. However, over 50s life insurance can sometimes have whole of life insurance included in it.
A monthly premium could start from as little as £4.83**.
And it could take minutes to get life insurance quotes from our panel of providers.
**50% of people could achieve a quote of £4.83 per month for their life insurance for up to £100,000 worth of cover based on Compare the Market data in May 2019.