Whole of Life Insurance
Guaranteed payout whenever you die — no fixed term, no risk of outliving the policy.
Unlike term life insurance, which only pays out if you die within a fixed period, whole of life insurance has no end date. It guarantees a payout whenever you die — whether that is next year or in 40 years' time. This certainty makes it particularly valuable for inheritance tax planning, leaving a guaranteed legacy, or covering funeral costs. Because the payout is guaranteed, premiums are higher than term insurance — but the policy never expires and never needs to be renewed.
What is Whole of Life Insurance?
Whole of life insurance provides a guaranteed sum assured that is paid out whenever the policyholder dies — there is no fixed term and no risk of outliving the policy. The policy remains in force as long as premiums are paid. Because the payout is guaranteed (unlike term insurance, which expires), premiums are higher than equivalent term policies. Whole of life policies can be written in trust, ensuring the payout falls outside the estate for inheritance tax purposes and is paid directly to beneficiaries without going through probate. Some whole of life policies include an investment element — the premiums are partly invested, and the policy builds a cash value over time. Others are purely protection-based with no investment component. We will explain the options and recommend the most appropriate structure for your needs.
Who is it suitable for?
Key Benefits
Tax Considerations
When written in trust, the payout from a whole of life policy falls outside the estate for inheritance tax purposes. This means the proceeds are not subject to the 40% inheritance tax charge and are paid directly to the beneficiaries, bypassing probate. This is a significant benefit for those with a potential inheritance tax liability. The premiums themselves are paid from post-tax income and are not tax deductible. For those using a whole of life policy specifically to cover an inheritance tax liability, the policy is typically written in trust from the outset. Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Tax treatment depends on individual circumstances and may be subject to change. We recommend seeking independent tax advice.
Real-World Examples
Inheritance tax planning — covering the bill
A couple have an estate valued at £1.5 million, giving rise to an estimated inheritance tax liability of £400,000. They take out a joint whole of life policy for £400,000, written in trust. When the second of them dies, the policy pays £400,000 directly to their children — giving them the funds to settle the inheritance tax bill without having to sell the family home or other assets.
Leaving a guaranteed legacy
A grandparent wants to leave a guaranteed sum to their grandchildren, regardless of when they die. A whole of life policy for £50,000 is arranged and written in trust for the grandchildren. The grandparent pays a modest monthly premium for the rest of their life. Whenever they die, the grandchildren receive £50,000 — a guaranteed legacy that does not depend on the grandparent dying within a fixed term.
Covering funeral costs
A retired individual wants to ensure their funeral costs do not fall on their children. A whole of life policy for £15,000 is arranged and written in trust. When they die, the policy pays out quickly — outside the estate and without waiting for probate — giving the family the funds to cover funeral costs immediately.
Business owner — IHT on business assets
A business owner's estate includes shares in a trading company that qualify for Business Property Relief, reducing the inheritance tax exposure. However, other assets — including investment properties and savings — are fully exposed to IHT. A whole of life policy written in trust covers the estimated IHT liability on the non-business assets, ensuring the family does not face a large tax bill.
Frequently Asked Questions
Request Your Relevant Life Quote
Find out if your business protection is adequate, correctly structured, and as tax-efficient as it could be.
Why Choose JK Insurance Brokers?
- Whole-of-market access — all leading insurers
- FCA authorised & regulated (FRN 1047042)
- No broker fees — ever
- Business protection specialists
- Personal, one-to-one service with Tom Dobbe
- UK-wide advice by phone or video call
- Ongoing reviews as your business grows
Speak Directly to Tom
I help company directors and business owners protect their families, shareholders and businesses.
01737 333249[email protected]