Money Advice Service

Whole-of-life policies payout a lump sum when you die, whenever that is. The size of the payout depends on your policy. With some policies, you can stop paying once you reach a certain age, but with others you have to make monthly or annual payments right up until you die. If you set up your policy in a trust, payment will be made to the trustees to distribute to the beneficiaries of that trust.

When might a whole-of-life policy be for you?

A whole-of-life policy might be for you if:

  • you want the chance to earn a higher payout for your dependents by linking life assurance with investing
  • you understand that payouts depend on your investment’s performance
  • you understand that charges will reduce your policy’s value.

Some whole life insurance policies only give you life assurance, while others are linked to an investment.

If you’re looking for investment growth to increase how much is paid out when you die, make sure the policy is investment-linked.

How they work

Not sure what something means? Have a look at our Protection insurance glossary.

  • You buy a whole-of-life plan using monthly or annual payments or a one-off sum.
  • For unit-linked whole of life policies your money will be split – some is used to buy the life assurance to pay the sum assured. The rest will be invested in an investment fund.
  • For unit-linked/flexible whole of life policies the insurance company will have regular review dates, where they’ll compare the value of your policy with the cost of the life assurance it needs to provide. If they find the investment fund isn’t performing well enough to cover the cost of benefits, your provider might suggest increasing your regular contribution or else reducing the sum assured.
  • Some policies give you the choice of adding insurance against certain illnesses or against becoming disabled.

How your money is invested

When you buy whole-of-life insurance some of your money might be used to pay the life insurance premiums and some put into investment funds.

The two main options are:

Risk and return

  • Your estate will get a lump sum when you die, so long as you’re still paying the premiums (or paid the premiums up to the age stated in the policy).
  • Usually a minimum payment on death is specified. For unit-linked/flexible whole of life policies anything over and above this depends on the value of the unitised funds you’re invested in, or the bonus payments received by your with profits policy.
  • You might end up getting back less than you invested.

Access to your money

A whole-of-life policy is designed to pay out on death whenever that is.

If you decide to surrender the policy you’ll receive the value of the fund less any penalties/charges applied, which might be considerably smaller than the amount paid in premiums.

Ending your policy early

  • You can end a whole-of-life policy early, but there can be high charges to do so and you might get back less than you invested.
  • If you end a policy early, it might be difficult to open a new one later. Whole-of-life policies get more expensive as you get older, and you might have developed a health problem that makes it more difficult to obtain life assurance cover.

If you have a whole-of-life policy and are thinking about taking your money out, learn about your options with our guide on Ending your with-profits policy early


  • The provider will charge for their services, so make sure that you understand what the charges will be and the impact they might have on your investment returns
  • If you end your with-profits policy early, you’ll end up paying high charges and penalties.

Before you buy a policy make sure you understand the impact charges can have on your investment.

Read our guide on Understanding investment fees

Safe and secure?

If the insurance company goes bust another insurer might take over the company’s business.

Otherwise you might be able to claim compensation.

You cannot claim compensation simply because the value of your investment falls.

Where to get a whole-of-life policy

You can buy a whole-of-life policy from a financial adviser or directly from an insurer.

Friendly Societies (member-run mutual benefit organisations) are another option.

Their whole-of-life policies might offer some additional tax advantages although the amounts of money that can be paid into them is very limited.

Keep in mind that these are complex financial products. If you don’t understand what a policy is offering – or if you’re unsure whether these policies are a good fit for your needs – speak to a financial adviser before you buy.


With some planning, your dependents might be able to receive the lump sum tax-free.

Discover more information from our guide on Life insurance and Inheritance Tax.

If things go wrong

If you’re unhappy with the service you receive and want to make a complaint, learn about your options in Sort out a money problem or make a complaint.

This article is provided by the Money Advice Service.