Whole of Life insurance - Guide - clearkey.co.uk
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Guide: Whole Of Life Insurance

Whole of life insurance is defined as life insurance that guarantees a death benefit to your beneficiaries no matter when you die. The death benefit is the amount of money paid out upon your death and is often referred to as the amount of cover you take out. Unlike term life insurance, which covers you only for a pre-agreed term, whole of life insurance covers you for your entire life.


As a result, whole of life insurance is typically more expensive than term life insurance as you’re potentially covered for longer. It’s also intended to cover your entire life and pay your loved ones no matter what. Term life insurance is usually designed to cover your mortgage or provide a payout for children before they reach financial independence, in the event, you die young.

Why whole of life insurance?

Whole of life insurance is usually more expensive than term life insurance, so what might make it worth having? The main reasons are outlined below:

  • A whole of life insurance policy offers you peace of mind because it guarantees your relatives will be protected financially after your death, no matter when it occurs.
  • The payout can be exempt from the usual 40% inheritance tax (IHT) if you write it into a trust. They may receive more than they would with term life cover because of the investment element of whole life cover.
  • Its cash value can be a source of tax-free funds during your lifetime

Types of whole of life insurance

As suggested above, whole of life insurance can be broken down into 2 main types.

Balanced cover

Sometimes called standard cover, this is the easiest type to understand. You pay a fixed monthly premium and when you die, the insurer pays out a fixed amount (death benefit) to your named beneficiaries.

Maximum cover

Here your insurance is linked to an investment fund. Your insurer invests your money (along with everyone else’s in the fund) to try and grow the overall pot. Your monthly premiums are reviewed at intervals throughout the policy and your cover changes according to the performance of the investment. Whilst the premium may start off cheaper, they will normally increase over time and can become substantially more.

Cost of whole of life insurance

Whole of life insurance is more expensive than term life insurance as it offers a guaranteed payout (term life insurance may not payout at all if you die after the policy expires).

You’ll need to pay the whole of life policy into retirement, not just when you’re working and so this needs to be considered from the start. If you miss any payments, the policy will be cancelled and no monies paid out.

The actual cost of the insurance will be determined by age, amount of cover, your health and so on. Remember it will also likely change as the policy matures to reflect its investment-linked performance


To conclude, Whole of Life insurance is suited for people who are seeking lifelong insurance policies that can help towards inheritance issues as well as the capability to grow a potentially tax-deferred cash value.

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Because we play by the book we want to tell you that...

1. We understand equity release isn’t for everyone, and we’ll never say it’s the right option for you, that’s why we pass you onto an Expert.

2. A lifetime mortgage is a loan secured against your property. With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end. Usually, that’s when you, or the last remaining applicant, either passes away or moves into long-term care.

3. With a lifetime mortgage you’ll still retain full ownership of your home.

4. Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.

5. Mortgage Advice Bureau Later Life offer lifetime mortgage products from a carefully selected panel of providers.

6. Unless you decide to go ahead, Mortgage Advice Bureau Later Life’s service is completely free of charge as their fixed advice fee of £1,295 would only be payable in completion of a plan.

7. ClearKey is an independent marketing website which only acts as an introducer to companies who offer advice on various financial plans, products and services.

8. Our partners are authorised and regulated by the Financial Conduct Authority.

9. ClearKey.co.uk are not authorised to give any advice and we are not liable for any financial advice provided by or obtained through a third party.

10. Life insurance products attract terms and conditions. Price information contained within this website are for illustration purposes only. You will receive a full policy document upon application which will set out the terms, conditions and limitations of cover provided under the plan.

11. Your home may be at risk if you do not keep up repayments. Think carefully about securing debt against your home. When consolidating existing borrowing be aware that extending the term could increase the amount repaid.