Whole of life assurance

A Whole of life policy is a long term insurance policy designed to pay out a cash lump sum on death whenever that occurs. Traditionally, such policies have built up a cash value over time, although in the early years of the policy this may be very low.

Whilst Whole of Life plans can contain a savings component based upon a unit linked approach, many plans only offer pure protection as this enables the insurer to quantify risk and to offer potentially lower premiums.

With an investment based plan the initial premiums are set on the basis of an assumed investment return. Units, to which the premiums are allocated, are cancelled on a monthly basis to pay for the insurance cover. The premiums are usually reviewed every 10 years, although intervals are often shorter at older ages. If the value of the policy is not enough to maintain the sum assured, the policyholder has the choice of increasing the premium and/or reducing the level of cover, or in some cases accepting that the cover may expire without value before death.

Policy holders do have the opportunity to tailor the benefit characteristics of their whole life plan by choosing the type of cover required:

Maximum Cover plans – The premium is set for a given period, at the end of which the premium is revised to a new and higher level in line with the client’s new age.

Standard/Balanced Cover plans – The premium level is set at such a rate that it need not be increased during the person’s lifetime provided that the underlying investment fund grows at the assumed pre-determined growth rate.

Guaranteed Cover plans – There is no underlying investment, but a surrender value may be written into the contract. A Guaranteed level of cover is set up linked to a guaranteed premium, this was previously known as ‘whole life non-profit assurance’

Recent developments have seen the emergence of a combined Long Term Care and Whole of Life plans, whereby a lump sum is paid out when the person covered dies or is diagnosed with a terminal illness( with life expectancy less than 12 months) or meets certain criteria for long term care cover

Whole of Life policies can have a variety of uses, depending upon individual needs the use of trusts can be very valuable when estate planning, and we can help you in this regard.



Edmans IFA Limited is authorised and regulated by the Financial Conduct Authority.
Registered in England and Wales no. 5481274. Registered office: 146 New London Road, Chelmsford, CM2 0AW
Edmans IFA is entered on the FCA register (www.FCA.gov.uk/register) under reference 436338.