Whole Life Insurance

This article was last updated on 1 June 2022.  

Whole Life Insurance

In the UK choosing life insurance policies can create issues and confusion. Whole life insurance will cover you no matter when you die, but this comes at a cost. Keep reading to discover whether this might be right for you.

Topics that you will find covered on this page

Is life insurance worth it?

A life policy can be a great way of protecting loved ones. These life plans provide financial support in the case of your death!

Of course you need to consider pros and cons and various circumstances such as policy length impact cost. Different options have differences in commitments and their specific terms. An expert advisor can  give you tips and explain the options out there, which can be a great help.

Whilst the service might cost, it can help minimise your debts and liability. Always ensure that the person you speak with is authorised and regulated by the financial conduct authority

What is whole of life insurance?

Term life insurance gives someone life insurance cover but only for the duration of a set schedule. Whole life insurance, however, is an insurance policy that lasts the entirety of your lifetime.

You might also find these policies being called a life assurance plan. But what they do is the same. 

Life cover is a guarantee for beneficiaries. Regardless of your age when you die they get a nice cash lump sum payout from your insurer.

Here is a short video that explains it all.

Can I get insured if I have poor health?

It is even more important to shop around carefully and find the best option for you if you have poor health. This is because there can be higher premiums if whole of life insurance policies need to cover your condition or illness.

The reason higher premiums arise is because certain health conditions come with added risk of death. This means the cost to the insurer is likely to be higher. 

If you want to keep the cost of your life cover down,  a member of an expert advice team can help. Anyone you decide to make an enquiry with really needs to be authorised and regulated by the financial conduct authority, for your own security.

What will my whole life insurance cover?

With so many life assurance plans on the market it is never possible to say for certain what is covered. 

But, generally providers will cover most causes of death, in contracts, even those related to illnesses . 

That said, before signing the contract check the terms of your quote with scrutiny. 

Some death policies might have exclusions for certain cases, so you want to watch out for these. Examples of exclusions include deaths caused by specific illnesses or alcohol/ drug abuse. 

Whats the difference between this and term life insurance?

Whole of life policies covers you regardless of the age you die at. It is essentially whole life cover. So, your loved ones are sure to get a lump sum death benefit at some point!

But, the drawback is that whole of life insurance policies inevitably come with higher premiums.  This is simply because the insurer is guaranteed to have to pay out at some stage! 

Term life insurance provides you with cover for whatever the agreed duration of the life policy is. Essentially if, when you die, you are of an age is not included in the policy duration, funds will not be given to your family or chosen beneficiaries. 

When could term life insurance be a better choice?

Certain people will only require or want cover for a specific period of time. In these situations term insurance policies are better because the life insurance cost is reduced.

For example, if you have not yet paid off your mortgage you might only want cover until you do. 

Some people have dependents that rely on their financial support for now but wont in the future. Then, they take out cover until their children are grown up. 

On the other hand, whole life policies might suit you better if your family will likely need your continuing support. 

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policy of life insurance

What happens if I change my mind? Can I put an end to my cover?

 If you want to end your whole of life cover, make an enquiry about the cost of doing so as you may be charged exit fees. 


In the majority of cases your accumulated fund will be exchanged for cash. 

What are the 3 different types of whole of life cover?

The main types of whole of life insurance are unit-linked, non-profit and with-profit. We recommend you shop around as individual providers offer different policies and variants e.g. joint policies.

Always seek professional and personal expert advice before choosing the type of policy.

1 – Unit-Linked

This type of insurance involves flexible premiums that depend on the size of the return payout  you want . 

So that you receive the lump-sum you want your insurer will invest your premiums. This can be a bit risky, though.Your premiums might rise if investments do not perform well/ as expected

2 – Non-profit whole life insurance

This is the simplest whole life insurance experience. The premium is fixed for the rest of your life. As is the lump sum beneficiaries will receive when you die. 

3 – With-profit whole of life insurance

This form of whole of life insurance is essentially a mix of the other two. Your premium is still fixed but The size of the lump-sum your loved ones get when you die varies.

This is because your provider invests your payments in the stock market. The insurance payout depends on investments’ performance.

What are the risks of whole of life insurance?

Data from the Financial Ombudsman shows that most common complaint made about whole of life insurance is having premiums reviewed. 

Even fixed premium policies might not be static. Insurers often offer a fixed premium for the first 10 years but then will still review it.But, many do not realise fixed premiums are going to be reviewed.

Another risk are the fees you might face if you decide to end cover early. So, be sure before you sign anything. Also, check the terms carefully. Sometimes specific causes of death are not covered by the policy. 

And remember, always choose a provider that is authorised and regulated by the financial conduct authority. 

What are the main benefits of whole life insurance?

In addition to the general advantages of life insurance, the main plus is the continuous cover. 

In regards to term insurance, people often outlive their policy.  This means when they die they are not covered by it and their family get no benefits, despite all the premiums paid. 

However, when it comes to whole life insurance, you and your family will be forever protected by the policy. Essentially, your policy will have you covered by regardless of how long you live. 

Book an appointment to speak to a whole of life insurance specialist


whole of life insurance

How does a whole life policy work?

 As with any life insurance policy, you pay premiums to your insurers. More often than not these payments occur monthly by direct debit.  However, sometimes a  life insurance provider allows you to make an annual or one-off payment. 

The details of your policy determine The amount you pay.  it is crucial to shop around for quotes since Life insurance rates differ between life insurance companies, sometimes drastically! 

The provider will invest the money you pay in your monthly premiums . Depending on your policy type, this may or may not affect future premiums and payouts. You can read more about this above. 

When death occurs and the legal side is sorted, your loved ones get a nice lump sum. Regardless of the future age you die at they are guaranteed this financial protection.

Is there a maximum age for taking out a policy?

There is no set limit to when you can take out whole of life insurance. However, premiums generally rise with age, so it might be in your best interest to take one out sooner rather than later. 

When should I buy my whole of life insurance policy?

Most guides suggest that taking a policy out when you are younger is financially smarter. This is because as you age your health deteriorates and premiums rise. The way that policies for life insurance work also mean that you might get further financial rewards by taking out a policy when you are younger.

This is because many policies offer a savings element.

Taking the policy out earlier gives you a longer window to build your savings. For some, the savings can be a source of financing large purchases, such as a deposit for a house, or a new vehicle. Having more in your savings helps you offer better care and support for your beneficiaries once you die. 

What affects the premiums?

The premiums depend on your current age, health, whether you smoke, your profession, your medical history, and the amount of cover you want.

As a rough guide, if you want a low premium life insurance it might be wise to take out your policy sooner rather than later. 

How much is whole-of-life insurance?

Policies of life insurance have different expenses and fees based on a range of factors. 

One factor that has a significant impact on the costs of life insurance quotes is the size of the benefits you wish to leave to your family. If they are likely to need a lot of support, you might need a whole of life insurance policy that gives a bigger lump sum. 

The cost of whole of life cover can also be influenced by your medical history and lifestyle factors.

Before you agree to a policy of life insurance, compare the different whole life insurance policies. Speak to your children and other dependents too, to figure out the cash sum value they might need to be left on your behalf. 

whole life policies

Are whole of life assurance polices tax-deductable?

Unfortunately, life assurance purchases are not tax-deductable. The reasons behind this stem from the fact that life assurance is not a compulsory investment, but a choice made on an individual basis. 

Are whole life policies tax-free?

One advantage of whole of life life insurance is that the lump sum is not subject to income tax. However, in the event the cash value exceeds £325,000 your trustees will have to pay inheritance tax (IHT). The charges for this are 40% on all assets over the threshold. 

For some, the inheritance tax bill is a big issue. This is because if they cannot fund the IHT, they might have to take out a loan to pay it and access your estate. However, there are ways around the IHT penalties. 

If you are concerned about the cost of life assurance IHT and your family taking out loans, consider writing your whole of life insurance in trust. This means that the cash value your whole life cover pays out is not considered as part of your estate. 

How much will the insurance pay?

The amount your loved ones receive will ultimately depend on the specific details and points of your policy. Essentially, it will depend on the premiums that you have paid, and for how long. This is why it’s important to consider the different types of policies out there. 

Remember, the amount paid will only be tax free if the inheritance is valued at under £325,000.

Are there joint whole of life insurance policies available?

Yes, it is possible to get joint whole life insurance quotes. Premiums for joint whole of life cover are typically lower than paying two separate premiums, so you might make a saving, too. 

The difference with joint whole of life insurance is that the investments only pay out once. The payout is made at the point when the first member dies. This gives the other access to the money accrued, giving them a level of financial security. 

The remaining life whole of life insurance policy holder can use the money how they see fit. They might choose to pay off the mortgage on their home, buy a new car, pay bills such as energy and broadband, or even travel. 

If you are concerned about the limitations of only receiving one payout, you will be pleased to know that some whole of life insurance policies cover the second death in a joint policy. Others will not, though, so be sure to ask the question when shopping the insurance market. 

whole of life cover

Would you like some help with getting a whole of life insurance policy?

Book an appointment in the calendar below


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Have a free consultation with a whole of life insurance specialist

Have a free consultation to discuss your circumstances and see what options you have:

  • which type of policy is likely to be best for your circumstances
  • how much a policy is likely to cost
  • what illnesses it is likely to cover for you

If you would like some help, please leave your details below and someone will be in touch.

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Meet the author

Rob Atherton

Rob Atherton

Rob writes and edits the content produced by the rest of the team. He has a degree in History from Leeds University and has producing, reviewing and editing the site since 2016

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