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Whole of life
Whole of Life Assurance is a life insurance policy that is designed to stay with you throughout your life and pay out a lump sum on death.
They will normally have an investment element to them and in the early years, whilst your life insurance premiums are lower, some of your monthly payments will be invested in an investment fund. As you get older, the cost of your life cover will increase and there will come a point where it has increased to more than your monthly payment. Any investment element that you have accrued is normally used to subsidise your premiums in the later years although the premiums may also need to be increased. If you cannot afford any premium increased in the later years then you may be able to reduce the level of cover and therefore reduce your premiums.
The ‘policy type’ refers to how much weighting is put on the investment element. A ‘standard’ or ‘balanced’ type normally has a higher premium than a ‘maximised’ type plan. This is because maximised plans tend to have no investment element to them, which means that the premiums are likely to increase dramatically in future years.
