Standard Whole-of-Life
A straightforward whole-of-life policy with a fixed sum assured and guaranteed or reviewable premiums. Suitable for individuals seeking lifelong cover for estate planning or funeral costs.
Unlike term life insurance, whole-of-life cover does not expire. It is designed to pay out whenever you die, making it suitable for estate planning, inheritance tax mitigation, and providing a guaranteed legacy.
Understanding the difference between whole-of-life and term life insurance helps you decide which is appropriate for your needs.
Term insurance expires at the end of the chosen term. If you outlive the policy, there is no payout. Whole-of-life cover has no term, it pays out whenever you die, making a claim certain (subject to premiums continuing).
Whole-of-life policies written in trust are commonly used to cover an anticipated inheritance tax liability. The payout, if held in trust, falls outside the estate and can be used to settle the IHT bill without selling assets.
A smaller whole-of-life policy can cover funeral costs and final expenses, providing certainty that these costs will be met without burdening family members.
Because a claim is inevitable, premiums are higher than for an equivalent term policy. This is the trade-off for the certainty of a payout. Your adviser will help you assess whether the cost is justified for your situation.
Important: Whole-of-life policies typically carry higher premiums than term insurance. Premiums and cover may be reviewed periodically depending on the policy type.
Whole-of-life policies come in two main premium structures, reviewable and non-reviewable. Understanding the difference is essential before committing.
The insurer reviews premiums at set intervals (typically every 10 years). Premiums can increase, sometimes significantly, at each review, particularly in later years. Initial premiums are lower, but long-term costs are less predictable.
Premiums are fixed at outset and do not change. Higher initial premiums than reviewable policies, but the cost is fully predictable for the life of the policy. Generally preferred for long-term estate planning purposes.
Some whole-of-life policies invest a portion of the premium and the sum assured may fluctuate with investment performance. These carry additional complexity and risk that your adviser will explain.
Most whole-of-life policies used for IHT planning should be written in a discretionary trust. This keeps the proceeds outside your estate and allows faster payment to beneficiaries without waiting for probate.
Whole-of-life insurance should be considered alongside professional legal and tax advice. The tax treatment of proceeds depends on how the policy is written and individual circumstances.
We compare whole-of-market whole-of-life policies for individuals and couples across all major providers.
A straightforward whole-of-life policy with a fixed sum assured and guaranteed or reviewable premiums. Suitable for individuals seeking lifelong cover for estate planning or funeral costs.
Combines lifelong cover with a with-profits investment component. The sum assured may increase over time based on bonuses, though this is not guaranteed. Premiums are typically reviewable.
A whole-of-life policy where the investment is linked to a fund. The value can rise or fall based on fund performance. Premiums are reviewed periodically. Carries investment risk.
Guaranteed acceptance whole-of-life for UK residents aged 50–85. No medical questions. Premiums are fixed. Sum assured is smaller but provides certainty for covering final expenses.
Any whole-of-life policy used for IHT planning should be written in a discretionary trust. This ensures the proceeds fall outside your estate and can be paid to beneficiaries without waiting for probate.
Covers two lives on a single policy. Can be structured on a first-death or second-death (last survivor) basis. Second-death structures are commonly used alongside IHT planning for couples.
Whole-of-life insurance is a type of life insurance, but it is distinct from term life insurance. Term insurance covers you for a fixed period and expires if you survive the term. Whole-of-life insurance has no term, it remains in force for the rest of your life and is guaranteed to pay out, subject to premiums being maintained.
When written in a suitable discretionary trust, the proceeds of a whole-of-life policy fall outside your estate for inheritance tax purposes. This means they can be used to pay an IHT bill without forming part of the taxable estate itself. This is a well-established and commonly used estate planning strategy. Professional legal and tax advice should always accompany any such arrangement.
A reviewable premium is one where the insurer reserves the right to review and increase the premium at set intervals, typically every 5 or 10 years. Reviewable premiums start lower than non-reviewable (guaranteed) premiums but can increase substantially, particularly in later years as mortality risk rises. Non-reviewable premiums are fixed throughout the life of the policy, offering greater certainty.
In most cases where the policy is intended to cover an IHT liability, yes. Writing the policy in a discretionary trust means the proceeds do not form part of your estate, avoiding inheritance tax on the payout itself. It also allows faster payment to beneficiaries without waiting for probate. Your adviser will explain the trust options and recommend the most appropriate structure for your circumstances.
Yes, for an equivalent initial sum assured, whole-of-life premiums are typically higher than term insurance premiums. This reflects the certainty of a claim at some point in the future. The appropriate product depends on your objective. If you need cover for a specific period (e.g. your working life or mortgage term), term insurance is usually more cost-effective. If you need a guaranteed payout regardless of when you die, whole-of-life is the appropriate product.
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