Whole of life assurance
Whole of life policies are designed to provide life assurance coverage for an individual’s whole life, rather than a specified term. Usually 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 the 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 10 years of the policy, and each 5 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 also eat up a portion of the premiums.
Whole of life policies can be useful for some people to provide for an inheritance tax liability.