Whole of Life policies are designed to provide life assurance for an individual’s whole life, rather than a specified term. They contain a savings component, the idea of which is to build up a fund in the early years which will subsidise the life assurance cost in later years. A fixed death benefit is paid to the beneficiary, this is either the sum assured or the value of the investment pot, whichever is the greater.
Premiums are usually fixed for the first ten years of the policy, and every five years thereafter, after which the policy is reviewed and the premiums or the sum assured may need to be amended depending upon investment returns. Management fees may also deplete a proportion of the premiums.
Whole of Life policies can be useful, for some people, to provide a proportion of protection against inheritance tax liabilities.
These policies can prove more complex than term assurance policies and therefore advice should be sought prior to inception of a policy.