Whole-of-Life Insurance

Whole-of-life insurance, also called 'life assurance' by some providers, offers protection for your dependents when you die. It is guaranteed to pay out a sum of money (the 'sum assured') either upon your death or when you are diagnosed with a terminal illness. In return for this protection you pay a monthly sum to the insurer: these payments are known as premiums. As whole-of-life insurance is guaranteed to pay out at some point, your premiums are more expensive in comparison to term insurance. Whole-of-life policies have a cash value, also called a surrender value; this allows you to cancel your policy and claim a cash sum. Each insurance company will have different rules, but often when you have reached a certain age, such as sixty-five or eighty, you will no longer be required to pay insurance premiums but will continue to be covered whenever you die.

Whole-of-life insurance can be quite complicated because there is often an investment element involved. Typically, life insurance with an investment element works by investing some of the money that you pay each month in a savings fund and using the rest of the money to buy units in an investment fund. Usually this investment fund will be managed by your insurance provider, and so it is advisable to analyse the past performance of the company's life funds. Although previous performance should not be taken as a guarantee of future performance, it can indicate the likelihood of your investment performing well or not. Depending on the type of whole-of-life policy that you have, your insurance provider will 'encash' some of the money invested in the investment fund periodically as you get older. This money will be paid into the savings fund that will later provide the sum assured (the money paid to your survivors) when you die.

As you get older, your insurer should encash more and more of the money in the investment fund. This is called 'lifestyling' and ensures that by the time you are old and more likely to require payment of the sum assured, your money is no longer in risky investments. Lifestyling should therefore allow your insurer to sustain the sum assured, whilst allowing you to benefit from the rewards of investment. Whole-of-life insurance policies are usually reviewed after ten years and subsequently every five years. If the investment element has performed badly, or not as well as expected, the insurer may increase your premiums to ensure that the agreed sum assured is attained, alternatively, the insurance provider may reduce the initial sum assured but maintain the cost of the premiums.


Although many providers will simply advertise a whole-of-life policy, there are a range of whole-of-life insurances available. For details see:

• Maximum Cover
• Balanced Cover
• Non-Profit Cover
• With-Profit Cover
• Low-Cost Cover
• Universal Cover