Whole of life assurance guarantees that you are covered throughout your life. Whenever you die, a one-off lump sum of money will be paid. You decide how much money you want to be paid out and whoever receives it can spend it however they like.

Whole of life assurance often works out more expensive than other forms of life insurance because of the certainty that a payout will always be made. You may be able to pay premiums monthly or annually, and with some companies you may be able to stop paying premiums when you reach a set age even though the cover will continue for the rest of your life.

Pros

• It’s a good way of ensuring that no matter when you die, there will be a payout.
• It provides you with permanent cover and will always pay out in the end, unlike most other forms of life insurance which have a set time period.
• The one-off lump sum payout is usually free of income tax and capital gains tax and whoever receives it can use it however they like. However, it may be subject to inheritance tax if it is not placed in a trust.
• You may be able to stop your policy at any time (called surrendering) and get some money back, but doing so will end the policy and leave you uncovered in the future.

Cons

• If you choose to stop your plan and take the money from it, the value is likely to be small in comparison with the level of cover and the total premiums paid. Some plans have no cash-in value, so if you stop paying premiums you'll get nothing back.
• It is usually more expensive than other types of life insurance because of the certainty that a payout will be made.

If you want the reassurance of knowing that no matter when you die, there will be a payout then whole of life assurance may be a good choice. If you have a family, then leaving them a lump sum will help to ensure that they are not left to struggle at a difficult time.

If you want to research the market for yourself, look at insurance companies, banks, building societies and other financial companies. You can usually buy direct through the internet or over the phone. Alternatively, you may want to talk to a financial adviser who can look at your whole situation.

Think about it – Make sure you’ve thought carefully about what you want and taken into consideration any cover you already have or cover you are entitled to from your employer. You don’t want to be paying for more cover than you need.

Check the small print – Make sure you understand what is and isn’t covered as these can vary from company to company.

Consider all your options – Ask what’s available and make sure you understand all the extra options.

Shop around – Different companies offer different levels of cover at different prices. Make sure you shop around and that the cover you choose is the most appropriate for your needs and circumstances.

Writing in trust – Consider having your policy written under trust to ensure that you minimise the amount of inheritance tax your beneficiaries may have to pay.

If unsure, get advice – If you’re unsure of what to do next, speak to a financial adviser who will be able to help you make the right choice.