Whole of life insurance

A whole of life insurance policy pays out whenever you die – as long as you keep paying your premiums – because there is no fixed policy term. This makes them more expensive than both level term policies or mortgage insurance policies that reduce cover and therefore, pay out in line with your mortgage.

Like any other life insurance policy a whole of life plan pays out a tax-free lump sum. In most cases this will be in return for a fixed monthly cost or premium. However, some insurers offer whole of life policies that can be reviewed at agreed points in the term. This may be because the policy includes a savings on investment element. There are also policies which are designed to allow you stop paying premiums, say at retirement age, but still benefit from the insurance cover until you die.

Whole of life insurance can be more complicated than typical life insurance, so it would be a good idea to get the appropriate financial advice before buying such a policy.