If you’re looking to buy life insurance cover on a permanent basis there's one policy in particular that may be perfect for you.  Whole life insurance can provide you and your loved ones with permanent cover, find out how it works in the following article.

What is whole life insurance?

Often referred to as life assurance, whole life insurance can cover you for your entire life once you take out a policy.  When you die, your insurer pays out a lump sum to your family to support them financially during a difficult time.

How does whole life insurance work?

With whole life insurance, your policy pays out no matter when you die - essentially meaning your family is guaranteed a pay-out (so long as you keep up with your policy premiums!). However, it’s worth bearing in mind that because of this, whole life policies are generally more expensive than other types of ‘term based’ life insurance policies.

There are two main types of whole life insurance cover:

Are there different types of whole life insurance?

Yes, whole of life policies are offered in two different ways:

Standard whole life cover

Standard whole of life insurance is the version that Cavendish Online offers. This product has no investment value, you simply pick how much you would like to be assured for and pay your monthly premiums. This is the simplest form of whole life cover. Your premiums can be guaranteed or reviewable, so discuss your preference with an adviser first. 

To talk to a Cavendish Online adviser about whole of life cover, please call us on:

01392 436193


Unit-Linked whole life cover

This is an investment based product where part of your premium goes towards insuring your life, and part is invested. Unfortunately, Cavendish Online is not authorised to discuss this product with you.

Once your application has been accepted and your cover goes live, you begin paying monthly premium payments to your insurer. You must keep on top of your monthly payments, otherwise your policy may lapse and you’d  be left without cover.

Need to speak to an expert insurance adviser?

Should I get a term based life insurance policy, or whole life insurance?

Along with whole life insurance, term life insurance is one of the main types of life insurance cover. Both of these policies differ in terms of cost and length of cover, yet both can provide financial protection for your loved ones.

Term life insurance provides coverage for a set period of time, as opposed to permanently. Your family can only make a claim if you die within the policy term - if you survive the policy term then the policy simply ceases. 

There are 3 levels of term life cover:

  • Level term - Like balanced whole life cover, both the pay-out amount and premium rate are fixed throughout the policy.

  • Decreasing term - Typically take out to cover the cost of a mortgage or other large payments. The payout amount decreases over time, usually by a set percentage every year. 

  • Increasing term - The payout value increases overtime to try and offset the effects of inflation. Note that because of this, your insurer may also increase your premiums to reflect the increased  sum assured. 

Term life insurance is generally cheaper than whole life, however, it doesn’t provide permanent cover. Ultimately the type of cover you choose reflects the finances of you and your family.

For example, if you were looking to cover a repayment mortgage, you may choose a decreasing term life insurance. However, if you’re looking to ensure your family is protected throughout the future, with no end date on your cover, then whole life insurance may be the better option.

If you are unsure about what might be the best life insurance options for you and your loved ones then you should consider speaking to an adviser

Products & Services from the leading financial brands

  • Zurich
  • Legal And General
  • Aviva
  • AIG
  • Beagle Street
  • LVE
  • Royal London
  • Vitality Life
  • Virgin Money
  • Budget Insurance
  • Scottish Widows

What can whole life insurance cover?

Whole life insurance can be used to help your family cover an array of finances such as:

  • Everyday living costs

How much does whole life insurance cost?

When you apply for life insurance, your insurance provider will likely ask you some health and lifestyle questions. The nature of these questions helps them to generate an estimate of how much your monthly insurance premiums will be.

Your insurer will likely ask about:

With these questions it’s important to answer as truthfully and accurately as possible. If not, it could invalidate your cover and impact on your loved ones’ ability to claim on the policy if you pass away. 

Is whole life insurance tax-free?

Though whole life insurance is considered tax-free, it may be subject to inheritance tax. When you die the pay-out of your life insurance policy is deemed as part of your estate (i.e. any assets you own prior to your death).

Some people choose to write their policy into trust in order to try and keep the proceeds from their life insurance policy outside of their estate.

For more information on this subject, why not check out our 'Is Life Insurance Taxable?’ news article. 

Speak to the experts...

Give our advisers a call today.

Our team of friendly and professional advisers are on hand to help with any questions you may have regarding Life Insurance.

The advisers can also make recommendations tailored to your current situation and will research the market on your behalf, ensuring you secure the cover you need and supporting you every step of the way. 

01392 436 193(Monday to Friday, 9am - 5.30pm)

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