What Is Whole of Life Assurance?

Whole of Life insurance guarantees to pay out in the event of death, whenever it occurs. For a given premium, cover is provided for your whole life. The premium you pay can also include an investment element which could provide a cash-in value should the cover no longer be needed in future.

How the Insurance Benefits are Paid For:

A premium is charged based on the cost of providing the cover, the clients age and health situation. There are various types of whole of life insurance:

Whole of life With Profits – the premium includes an investment element which participates in the insurer’s with profits fund. The investment element helps the policy to keep pace with inflation, and whilst the bonus rate cannot be guaranteed, once added to the plan the bonus cannot be removed. The cover is suitable for those who wish to provide a tax free lump sum on death, or those who have a potential inheritance tax liability. The cost of the cover is set based on the client’s age and health, and takes into account the insurers expectations of investment performance and expenses.

Unit Linked whole of life policies – The premium is split between providing for the cost of the insurance cover, and investing into the insurer’s funds in order to subsidise the cost of cover in later years. The value of the investments and income from them may go down. You may not get back the original amount invested.

Non Profit Whole of Life – In this type of policy there is no investment or savings element, so your whole premium goes towards providing the sum assured.

Over 50’s Plan – If you’re aged 50-85 and a UK resident, these providers generally guarantee to accept you with no health questions. You choose a fixed monthly premium when you take out the plan and, provided you keep paying it when due, a fixed cash sum will be paid out when you die, after the plan has been in force for two years. If you die during the first two years, they may pay out all the premiums you’ve paid, plus half as much again (unless you die as the result of an accident in which case they’ll pay the full cash sum). You need to be sure you’re comfortable with the premium you choose as if you stop paying, your plan will end and you won’t get anything back. You should also be aware that depending on how long you live, you could pay more than the cash sum paid out.

The value of investments and income from them may go down. You may not get back the original amount invested.