Whole of Life

Whole of Life policies

A whole of life policy is another policy which does exactly as it says. It covers you for the whole of your life. When the inevitable happens, providing the policy is still in force, it will pay out a death benefit. These policies have no surrender or cash-in value and should not be used for investment purposes.

As payment of the benefit is inevitable Whole of Life policies tend to be more expensive than Term Assurance policies for the same level of cover (it depends on what age you are when you start the plan). Each premium is calculated to provide lifelong cover and a guaranteed payout on death. Upon death, a fixed sum is paid to the beneficiary. These policies do not have a savings or investment element and have no cash-in value during the lifetime of the policy.

These policies come in various forms:

• Non-profit whole life policies - A level premium payable throughout life. It pays a fixed cash sum at the time of death.
• With profit whole life policies - Same as non-profit policies but the amount paid on death is the sum assured plus whatever profits have been allocated.
• Low cost whole life policies - These have a guaranteed level of cover that the amount payable on death is the greater of the basic sum plus bonuses or the guaranteed death sum assured.

If you are worried about investment risk and increasing premiums, there are Whole of Life policies available which do not rely on fund performance, however, these do not acquire a surrender value.

Please be aware that in some cases this type of assurance is based on an assessment of the health of the applicant.