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Whole-of-life insurance is a type of life insurance policy that ensures a lump sum payout to your loved ones from your insurer when you die, no matter when that is.
This is in contrast to term life insurance, which only pays out if you die within the specified term of the policy.
Read up on what does life insurance cover?
Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a provider before committing to any financial products
Choose life insurance, health insurance, income protection and/or critical illness cover via LifeSearch and get a £50 John Lewis gift card.
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Whole-of-life insurance is generally a more expensive form of life cover than term life insurance or family income benefit insurance.
That's because insurers know that everyone will die eventually, so as long as you continue to pay the premium, they will have to pay out.
To help you understand the potential costs involved in whole-of-life insurance, we've compiled illustrative quotes based on different age groups and coverage amounts. Each quote is tailored to a non-smoker working in an administrative role. The higher the coverage amount and the older you are, the more you can expect to pay monthly.
The quotes provided are estimates intended to give you a rough idea of the potential costs for whole-of-life insurance. Actual premiums may vary based on various factors, including your health, lifestyle, and the specific terms of the insurance policy.
| Provider | Age | Coverage amount | Monthly premium | Take out a policy |
|---|---|---|---|---|
| Vitality | 30 | £10,000 | £9.39 | Use the service provided by LifeSearch |
| Royal London | 30 | £10,000 | £10.20 | Use the service provided by LifeSearch |
| Vitality | 50 | £10,000 | £14.43 | Use the service provided by LifeSearch |
| Royal London | 50 | £10,000 | £14.74 | Use the service provided by LifeSearch |
| Vitality | 30 | £100,000 | £51.58 | Use the service provided by LifeSearch |
| L&G | 30 | £100,000 | £54.20 | Use the service provided by LifeSearch |
| Royal London | 50 | £100,000 | £105.20 | Use the service provided by LifeSearch |
Table note: These are illustrative quotes provided by LifeSearch in December 2024. The table is ordered by monthly premium cost, starting with the cheapest quote.
The actual cost of your whole-of-life insurance policy will be come down to a host of factors about you, such as how much cover you want, your age, your health conditions, your lifestyle, and even your job. For example, people who smoke, have pre-existing health conditions, or work in more dangerous professions will typically pay more.
When you apply for your policy, you will be asked to answer a list of lifestyle and medical questions that will directly impact your premiums.
You must ensure that you can afford the premiums, not only during your working life but also once you retire. If you fail to keep up with your premiums, the cover will be cancelled.
That said, many whole-of-life policies only require you to pay premiums up to a certain age, typically to age 90. This varies between insurers and policies, however, so read the terms and conditions of any policy closely before taking it out.
Whole-of-life policies broadly come in two main types: balanced cover and maximum cover.
With balanced (or standard) whole-of-life insurance, your premiums will stay the same throughout your policy. Even when you get older, and your health may deteriorate, you will still pay the same amount for your cover. As a result, your premiums are guaranteed.
You will also agree a fixed cash sum that the insurer will pay out when you die.
With a maximum cover policy, your cover is linked to a financial services investment fund. The insurer invests the money you pay each month, in the hope that the returns generated from that investment will be sufficient to cover the cost of the eventual payout.
Your premiums will then be reviewed on a periodic basis. If the investments are not performing to the level that the insurer wanted, your cover may be changed. The insurer may increase your monthly payments, or reduce the size of the payout your loved ones will receive after you die.
While these policies are likely to be cheaper initially, premium increases are likely – and in some cases, they can be substantial.
Find out more and get advice on whole-of-life insurance using the service provided by LifeSearch. Discover more.
One of the big selling points for whole-of-life insurance is that it can help your family deal with an inheritance tax bill.
If your estate is worth more than inheritance tax-free thresholds, tax will be charged at 40% on the value of the estate above that threshold. You can find out more in our guide to inheritance tax.
Inheritance tax needs to be paid before beneficiaries can apply for a grant of probate. This can put your family in a difficult position – they need to pay a tax bill running into the thousands of pounds, but they may be unable to use the money in your estate to do so.
There are sometimes ways around this, but many are forced to take out a loan just to cover this bill. This can be an added source of stress at an already upsetting time.
A whole-of-life insurance policy can help avoid this issue. The payout provides the funds needed to clear an inheritance tax bill without loved ones needing to take out a loan or dig into their own savings.
This is reliant on the policy being written in trust, though. Find out more in our guide to how to write life insurance in trust.
Whole-of-life cover may also appeal if you want to leave some form of inheritance to your loved ones, or if you want to help with your funeral costs.
As you get older, any financial dependents may no longer be so reliant on the money you bring in. Once you're in your seventies, for example, you may have cleared your mortgage, while your children have long since left home to start families of their own.
As a result, you might prefer to stick to a term life insurance policy to cover you throughout the period on which your family is most likely to need financial help should you die. For example, some people take out a term life insurance policy that lasts until their mortgage is paid off.
Some whole-of-life insurance policies will allow you to cash them in, and get some level of payout before you actually die.
If you are tempted to do this, be sure to check the terms of your policy. The cash value of a life insurance policy may work out as significantly less than what you have paid in premiums over the years.
There may also be charges associated with cashing in your life insurance policy.
Choose life insurance, health insurance, income protection and/or critical illness cover via LifeSearch and get a £50 John Lewis gift card.
Get a quotePolicy must be active for 90 days before gift card is issued. T&Cs apply.
If you simply cease paying your monthly premiums, then the cover will stop and you will not get back any of the premiums paid. This is the same with term life insurance.
Term insurance offers a number of different policies and can be used for different purposes.
You might have one policy to pay off a mortgage if you die, another to provide a family income and a third to leave a lump sum. Term insurance is often cheaper and you can stop paying it once you no longer need life insurance.
Whole-of-life insurance is more expensive but will last longer.
Which you need or would best suit you depends on your personal circumstances and the prices you are quoted.
Search the UK's leading insurers using the service provided by LifeSearch.
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