Whole of Life Insurance is designed to protect you for the rest of your life, paying out a tax-free cash lump sum whenever your death may occur (providing you’ve kept up with the premiums).
Because you’re covered permanently, it’s often used to cover liabilities that arise when you pass away, such as funeral costs or an inheritance tax bill.
There are a few things to consider when looking to take out a Whole Life policy: how much does it cost? What does it cover? Is it right for your needs? We’ll answer everything in this guide.
What Is Whole of Life Insurance?
Whole of Life Insurance is a personal insurance policy that covers you for your entire lifetime – paying out a lump sum whenever you die. It guarantees a payout for things like funeral costs or estate planning, no matter when your death occurs.
It’s also known as “Whole of Life Assurance” or “Permanent Life Insurance”, protecting you against an event that’s “assured” to happen (your eventual death).
Whole of Life Insurance Vs Term Life Insurance
Term Life Insurance, is the most common type of Life Insurance, with policies ending after a set term agreed between yourself and the insurer. This type of cover (and particularly Decreasing Term Insurance) is therefore often used to cover a debt with a fixed term, such as a repayment mortgage.
Whole of Life Insurance policies are permanent, and will pay out on the event of your death, whenever that occurs. Because of this, Whole of Life Insurance tends to be more expensive than Term Insurance.
What Is Whole Life Insurance Used For?
There are a number of different reasons why you might consider taking out a Whole of Life Insurance policy.
Covering Funeral Costs
One of the most common uses for Whole of Life Cover is to provide Funeral Insurance.
This ensures a lump sum is paid out on your death to cover funeral expenses so your loved ones don’t have to worry about taking care of the cost or deducting it from their inheritance.
Over-50s Life Insurance plans are typically Whole of Life Cover used for funeral expenses, although some people may also use such policies to provide a small legacy to family or cover minor debts.
Paying Small Debts
Your estate is usually required to cover any debts held solely in your name after you die, providing there’s enough money contained in it to do so. (Note that the rules are different for debts/mortgages in joint names.)
Assuming you’ve left a solvent estate, debts are usually paid first and your beneficiaries only get the value of your estate net of any debt payments.
Some people use a Whole of Life Insurance policy to cover these small debts, although it’s worth noting that, over time, the premiums of such policies can rise to be worth more than the eventual benefit.
Protecting Against Inheritance Tax
When an individual dies, inheritance tax is due on the value of their estate above a set threshold. It takes a 40% bite out of anything you want to pass on to your loved ones above this limit.
Many families are facing an inheritance tax bill thanks to rising house prices, so it’s becoming increasingly common to use Whole of Life Assurance to cover these bills.
Where the estate has sufficient liquid funds to cover the inheritance tax bill, HMRC will usually grant the estate’s executor(s) access to settle the bill with a bank transfer from the deceased’s account(s).
However, these days most estates don’t have sufficient liquid funds available, commonly because a house makes up the bulk of the estate.
In such circumstances, executors and/or beneficiaries may have to pay out of their own pocket and attempt to recoup the money from the estate afterwards. Bank loans are also commonly available for beneficiaries in this situation.
What About IHT on Gifts?
When you make a gift to an individual (assuming you’ve made no other lifetime gifts or transfers previously) the gift only falls outside your estate if you live for 7 years. During that 7 year period, inheritance tax may be due on a sliding scale on the gift should you pass away during this time.
The below scale shows the IHT due on most gifts to individuals and into certain trusts (although the majority of gifts into trusts will be chargeable lifetime transfers [CLTs] and therefore have different rules).
Gifts Inter Vivos Insurance
While inheritance tax usually has to be paid out of the value of the estate, inheritance tax on gifts inter vivos must be paid by the recipient of your gift. That means your gift could land someone with an inheritance tax bill several years after you’ve made it, when the money may already be gone.
The amount they would have to pay tapers down depending on how long you live after making the gift, so a set of decreasing term Life Insurance policies – known as Gifts Inter Vivos Insurance – could cover the potential inheritance tax liability on gifts you’ve made.
A Gifts Inter Vivos Insurance policy isn’t Whole of Life Insurance, but rather a set of term Life Insurance policies to cover the inheritance tax liability on any large gifts you make whilst you’re still alive.
How Much Does Whole of Life Insurance Cost?
Whole of Life Assurance tends to be more expensive than Term Insurance because of the guaranteed payout. There’s an assured risk to the insurer, because as long as you keep paying the premiums and don’t otherwise violate the terms of the policy, there’ll be a definite payout at the end of the policy (i.e. when you pass away).
Whole of Life Insurance Calculator
The cost of your policy will largely depend on the sum you’re looking to insure, so you must first work out how much Whole of Life Insurance you need to buy.
If you’re using it to cover funeral costs or small non-mortgage debts, this should be fairly easy. Simply get a quote from a funeral director for your funeral expenses or calculate the amount of debt you have and set your Whole of Life Insurance policy to match this.
Use our Whole of Life Insurance Quote tool to calculate Whole Life Cover premiums for your specific needs and circumstances.
Beware of Reviewable Permanent Life Insurance Premiums
Reviewable premiums are often cheaper at the outset, but allow the insurer to increase premiums over the life of your policy. Therefore the cost of Whole of Life Insurance can jump significantly over time if you have reviewable premiums.
If guaranteed premiums are available to you, we’d typically recommend choosing them over reviewable premiums to prevent your premiums becoming unaffordable and leaving you unable to maintain the level of protection you need.
Compare Top Whole of Life Insurance Providers
Our below list of “top” Whole of Life insurers has been put together by considering product offering, company size, longevity, and customer reviews. You can also read our guide to the best Life Insurance for seniors.
Aviva
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Aviva is one of the UK’s largest insurers, serving more than 20 million customers across the nation. They recently acquired AIG Life UK (now Aviva Protection UK) to strengthen their personal protection offering.
Key Facts
- Maximum entry age: 85
- Claims payout rate: 98.8% in 2024
- Standout features: Optional waiver of premium, Aviva DigiCare+ for health support.
Why Aviva Whole of Life?
- Guarantees payout for funeral or estate planning
- Predictable premiums and flexibility for life changes
- Can increase cover without medical underwriting if IHT rules change.
Enquire about an Aviva Whole of Life policy.
Royal London
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Royal London is the UK’s largest mutual life, pensions, and investment company, owned by its members rather than shareholders. With over 2.3 million members, it’s known for its customer-first approach – scoring highly on review sites.
Key Facts
- Maximum entry age: 88
- Claims payout rate: 99.9% in 2024
- Standout features: Helping Hand wellbeing service, guaranteed insurability for certain life events without new medical evidence.
Why Royal London Whole of Life?
- High flexibility for estate planning and legacy
- Strong customer ratings and Defaqto 5-star rating
- Excellent claims record for Whole of Life product.
Enquire about a Royal London Whole of Life policy.
Scottish Widows
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Part of the Lloyds Banking Group, Scottish Widows is one of the UK’s oldest financial institutions, founded in 1815. With over 200 years of experience, they have built a strong reputation for stability and customer care, offering a wide range of protection, pension, and investment products.
Key Facts
- Maximum entry age: 79
- Claims payout rate: 99% in 2024
- Standout features: Access to Scottish Widows Protect: a range of practical and emotional support services at no extra cost.
Why Scottish Widows Whole of Life?
- Excellent claims record
- Cover lasts to age 90
- Terminal illness cover included.
Enquire about a Scottish Widows Whole of Life policy.
Vitality
![Vitality]()
Vitality is a leading insurance and investment company, offering a range of Life and Health Insurance products. Its core purpose is to make people healthier and help them to protect their lives, offering perks and incentives for policyholders who practice healthy habits.
Key Facts
- Maximum entry age: 84
- Claims payout rate: 99.7% in 2024
- Standout features: Unique rewards and discounts for adopting a healthy lifestyle.
Why Vitality Whole of Life?
- Discounts and rewards for healthy living (up to 40% off premiums)
- Optional extras for later life care and illnesses such as dementia
- Strong claims payout record.
Enquire about a Vitality Whole of Life policy.
Zurich
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Zurich Insurance Group is a global insurer with over 150 years of experience, serving customers in more than 200 countries.
Key Facts
- Maximum entry age: 83 (for single life cover)
- Claims payout rate: 99.8% in 2024
- Standout features: Increase cover without medical underwriting.
Why Zurich Whole of Life?
- Ability to adjust cover without medical checks
- No upper age limit at claim
- Strong financial stability and high claims payout rates.
Enquire about a Zurich Whole of Life policy.
SPEAK TO US BEFORE BUYING
The “best” Whole of Life insurer will depend entirely on your unique circumstances. We help people from all walks of life secure the most suitable coverage for their needs. For tailored, fee-free advice, call 02084327333.
Will I Need a Medical for Whole of Life Insurance?
This depends on a number of factors, although a medical is more likely to be a requirement the more you’re looking to insure. If you do require a medical, poor health may increase the cost of insurance.
However, broadly speaking there’s often no medical for Whole of Life Insurance, especially when you’re looking to insure relatively small amounts.
Many providers, particularly those offering guaranteed over-50s plans, won’t even require you to take a telephone health questionnaire to get Whole of Life Cover.
Essentially, that’s because providers realise that they are insuring against an event that will definitely happen in the future, regardless of how healthy or unhealthy you are.
As such, premiums tend to be higher across the board to take account of the more lenient medical requirements to obtain cover.
Is There an Age Limit on Whole Life Insurance?
The maximum age for Whole of Life Insurance varies by insurer. The age limits on Whole of Life cover are generally higher than for Term Insurance, with it being possible to find cover in your 70s and even 80s.
This is why the policies are so attractive for older individuals looking to use Life Assurance as part of their estate planning.
How is Whole of Life Insurance Taxed?
Without proper estate planning, the payout from any Life Insurance policy becomes part of your estate when you die.
HMRC usually charges inheritance tax at 40% on the proportion of an estate that rises above a set threshold. This will include your Life Insurance payout, potentially reducing it to less than the figure you initially required.
Does Whole of Life Cover Need a Trust?
It’s recommended you write a Whole of Life Assurance policy into a trust for your loved ones, so it never becomes part of your estate and subject to taxation.
The payout can be used to pay the tax bill so your estate can be released to the beneficiaries. That way, they can inherit what you always meant them to have.
Compare Whole of Life Quotes and Get Free Specialist Advice
As independent Life Insurance advisers, we’re on hand to answer any questions and provide guidance to ensure you can make an informed decision when considering Life Insurance.
If you’re looking for Whole of Life cover as part of estate and inheritance tax planning, the knowledge of our advisers could be invaluable in helping you and your beneficiaries mitigate any potential liability.
With so much to consider, and so much information to sift through, we’re here to help. We live and breathe insurance, and are ready to find you the right cover. Call 02084327333, email help@drewberry.co.uk, or compare quotes to get started.
Why Speak to Us?
When it comes to protecting yourself and your finances, you deserve first-class service. Here’s why you should talk to us:
- There’s no fee for our service
- We’re an award-winning independent insurance broker, working with the leading UK insurers
- You’ll speak to a dedicated specialist from start to finish
- 4083 and growing independent client reviews rating us at 4.92 / 5
- Claims support when you need it most
- We’re authorised and regulated by the Financial Conduct Authority. Find us on the financial services register.
Part of the Lloyds Banking Group, Scottish Widows is one of the UK’s oldest financial institutions, founded in 1815. With over 200 years of experience, they have built a strong reputation for stability and customer care, offering a wide range of protection, pension, and investment products.
Vitality is a leading insurance and investment company, offering a range of Life and Health Insurance products. Its core purpose is to make people healthier and help them to protect their lives, offering perks and incentives for policyholders who practice healthy habits.
Zurich Insurance Group is a global insurer with over 150 years of experience, serving customers in more than 200 countries.
