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What is Whole of Life Insurance?

A whole of life insurance policy does what it says on the tin; provided that you keep up with the payments and do nothing else to affect the policy it pays out the sum assured, at the latest, when you die regardless of when that happens. This is unlike term insurance which only pays out if you die within a set period; after the end of which your beneficiaries would get nothing. A whole of life policy also accumulates a cash value as part of the premium is invested in stocks, shares or other interest-bearing securities which means that you have a future asset which you could borrow against, surrender or even sell. It must be borne in mind though that this cash value usually doesn't start to accumulate until several years after the start of the policy and the longer the policy runs the lower the proportion of contributions that go into the investment fund and the higher the proportion that pays for the life insurance so if you're thinking of taking out a whole of life policy because you want some savings to fall back on in the future you may be better off thinking about a term assurance policy to protect your loved ones in the event of your early death, coupled with a savings plan.

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