What is whole life insurance?

Whole life insurance - sometimes called whole of life assurance - is a type of life cover that lasts for your entire life, not just a fixed term. As long as you keep up with the monthly premiums, it guarantees a payout to your loved ones whenever you pass away.

Unlike term life insurance, which only covers you for a set number of years, whole life insurance never expires, so you don’t have to worry about outliving your policy. It offers peace of mind that your family will receive the money they need, no matter when you die. It can help cover funeral costs, outstanding debts, or simply provide financial security for your family.

While it can be more expensive than other types of cover, the lifelong protection and guaranteed payout make whole of life cover a popular choice for people looking for long-term financial certainty.

Why choose whole life insurance?

Whole life insurance can be a great choice if you're looking for lifelong peace of mind. It's particularly appealing if you’re thinking about the long term, like helping your family cover inheritance tax, funeral costs, or having a financial safety net to help them live comfortably after you are gone.

Once you take out your policy, cover is locked-in as long as you keep up with the premiums. If you choose a ‘guaranteed premium’ option, you’ll also know that your premiums won’t increase, even if your health worsens.

With some whole of life policies, your premiums are invested so that a cash value builds up over time. With these policies, you are able to cancel the plan and receive the current cash value. This would mean that your life cover comes to an end.

Reasons to choose whole life insurance:

  • Guaranteed payout whenever you pass away.

  • Helps with funeral costs, debts or inheritance tax.

  • Offers long-term financial security for loved ones.

  • Can be used to leave a legacy or gift.

  • May also build up a cash value over time.

What happens when the policy pays out?

When a whole life insurance policy pays out, where the money goes depends on the type of policy you have and who it's set up to benefit.

If you take out a joint life policy, the payout usually goes to the surviving policyholder when the first person dies.There’s no second payout when the other person dies.

However, there are other type of joint policy:

  • ‘Dual life’ policies are available that pay out when the first person dies, but life cover still stays in place for the surviving partner.

  • There are also joint policies that pay only on ‘second death’ although these tend to be used for inheritance tax planning.

With a single life policy, the payout typically goes to your estate, which can delay things a little due to probate. However, you can name a specific beneficiary or have the policy written in trust to potentially speed things up - and have more control over who receives the money.

What does whole life insurance cover?

Typically covered

As long as you keep paying your premiums, whole life cover guarantees a payout when you die. But you can take out a policy that offers more than death benefits.

Some policies may also include added benefits. One of these is terminal illness cover, which typically pays out early if you’re diagnosed with a condition that’s expected to be fatal within a certain time (e.g. 12 months). Another is critical illness cover, which pays out if you are diagnosed with a serious illness covered by the policy.

What isn’t covered?

While whole life insurance offers guaranteed cover, there are still some circumstances in which you won’t be covered, including:

  • Missed payments: If you stop paying your premiums, your cover could end.

  • Suicide: Many policies exclude death by suicide within the first 12 months.

  • Fraud or non-disclosure: If you aren’t honest and accurate when applying, the insurer could refuse to pay out.

  • Excluded health conditions: Some policies may include exclusions based on your medical history, for example if you have a pre-existing condition.

Other events may not be covered, such as death due to war or participation in extreme sports. Please see each policy’s exclusions and limitations: always read the small print to make sure you understand the terms and conditions.

How much does whole life insurance cost?

Several factors will affect the cost of your whole life insurance policy, including:

Your age: The younger you are when you take out a policy, the cheaper your premiums will usually be.

Your health: Existing health conditions typically mean premiums are higher.

Your lifestyle: Lifestyle choices such as smoking can push premiums up.

Your occupation: Some occupations make life insurance more expensive.

The ‘sum assured’: A policy that pays out £250,000 will cost more than one for £100,000.

Added benefits: Adding benefits such as critical illness cover will typically increase the premium.

Single vs joint life: A joint policy is usually cheaper than taking out two single policies (but remember that it will typically pay out just once, so offers less protection than two separate policies).

Level v increasing: Some insurers offer the option of increasing cover, where the sum assured and premium rise each year to track inflation.

Reviewable or guaranteed premiums: Reviewable premiums typically start lower, but can rise when your payments are reviewed. Guaranteed premiums typically start off higher, but remain the same.

You may find your own quotes come in cheaper or more expensive than average premiums. The best way to find out how much cover would cost for you is to compare quotes from leading insurance companies.

How to keep costs down

Although whole life insurance premiums are generally higher than other types of cover, there are ways to reduce the cost without sacrificing your financial security:

Start as early as you can: The younger you are when you take out a policy, the lower your premiums are likely to be.

Choose the right level of cover: Look at your wider financial situation, such as any savings, property or investments, and choose a level of death benefit that makes up the shortfall without buying unnecessary cover.

Be healthy: Insurers typically offer lower premiums to people who maintain a healthy lifestyle. Stopping smoking, eating well and managing any chronic health conditions may trim pounds off your premiums.

Consider a joint policy: A joint life insurance policy is often cheaper than taking out two separate policies – but coverage ends after the first payout.

Look at different premium options: A fixed or guaranteed premium policy might be better for budgeting and long-term cost control than a reviewable premium policy where premiums can increase.

Review your cover: If your life circumstances change, such as children growing up, you might not need as much cover. You may be able to amend your policy, or cancel it and take out a cheaper one.

Shop around and compare quotes: Each insurer has its own pricing model, so it’s essential to compare quotes before committing to a policy. Also, some providers offer special deals, like free terminal illness cover. Don’t settle for the first quote you receive; it’s always worth exploring your options.

By making a few smart choices, you can reduce your premiums without compromising on the protection you need.

Things to consider

While whole life insurance can offer peace of mind, it’s not always the right choice for everyone. Here are a few things to think about before committing to a policy:

A long-term commitment: Whole life insurance is designed to cover you for your entire life. If you’re not sure about your long-term financial situation or are planning to make big life changes, a term life policy might be more flexible.

Premiums can be higher than term insurance: Whole life policies generally have higher premiums than term insurance. Consider whether the added cost is worth it, especially if your circumstances and need for cover may change in the future.

Missed payments can lead to cancellation: If you miss a premium payment, your cover may end. Some policies offer a grace period, but if premiums aren’t paid, the insurer might refuse to pay out or cancel the policy entirely.

Insurers don’t always pay out: There are situations where the insurer might not pay out. These include if you provide incorrect or misleading information during your application, and If death occurs during the exclusion period for specific circumstances (like suicide within the first 12 months).

Other types of insurance may be more suitable: While whole life insurance might not always be the most cost-effective solution. Term life insurance and decreasing life insurance, for example, may provide the cover you need at a lower cost.

Investment components may carry risks: Some whole life insurance policies come with a cash value or investment component. Depending on market conditions and fund performance, you could end up with less than anticipated.

If you’re unsure about whether whole of life insurance is right for you, seeking advice from a qualified financial adviser can help ensure you’re making the right decision.

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Answering your questions about whole of life insurance

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Page updated on 5th November 2025, Reviewed by Richard Groom