The main pros and cons of whole of life insurance come down to one trade: a payout that is certain to arrive, in return for premiums that usually run for as long as you live. This page sets out the advantages and drawbacks buyers weigh, each tied to an insurer's or public body's own words. It gives no verdict, because which side counts for more depends on what the money is for.

To have whole of life cover looked at against your own age and health, the quote form on this page puts you through to an FCA-authorised broker who phones you; there is no charge. What the product is has its own page, what whole of life insurance is, and the comparison with a fixed-term policy is in term vs whole of life.

The main advantage: a payout that is certain to come

MoneyHelper's guide to life insurance (archived August 2025) describes whole of life policies as paying out no matter when you die, as long as the premiums are kept up, and says people often take them out towards a funeral or to plan for Inheritance Tax. Term cover, by contrast, pays only if the death falls inside the term.

That certainty is worth most where a need has no end date. A bill that will arrive whenever death comes is the kind of cost a fixed-term policy cannot be sure of meeting.

The certainty still has conditions: premiums paid, and a valid claim. Aviva's summary for its Whole of Life Insurance+ (print code AL50007 02/2026) asks applicants to answer its health and lifestyle questions fully, truthfully and accurately, and says that if they do not it may amend or cancel the policy, or may not pay a claim.

The main drawback: premiums that usually run for life

Legal & General's summary (LG2588, June 2025) says premiums are due for as long as the insured person lives, and that because there is no fixed term it cannot say exactly what they will add up to. Cover that is bound to pay also comes at a price: MoneyHelper describes these policies as typically dearer than cover for a shorter term.

Paying in more than the payout

The longer someone lives, the more premiums they pay for the same sum. Aviva's summary makes the point about its own plan: since premiums are paid for as long as the cover lasts, their total could end up larger than the amount paid on a claim. Whether that happens turns on the premium, the sum insured and how long the person lives. What sets the premium is on what whole of life insurance costs.

Stopping part-way

These policies are not savings pots. Zurich's Key Features (PW720505007 02/25, sold through advisers) say that if you stop paying, cover ends and premiums already paid are not refunded; that document, like Aviva's and Legal & General's summaries, states that the policy has no cash-in value. Anyone who stops and later wants cover again may find it costs more, a warning Royal London gives holders of its reviewable plan. What cancelling involves is on what happens if you cancel life insurance.

Guaranteed or reviewable premiums

Whether the premium can change decides much of how a policy feels over decades, and it sits on both sides of the ledger. A guaranteed premium is the predictable side: Zurich's stays the same unless you choose Increasing Cover or change your cover. A reviewable premium is less certain. Royal London's page for existing holders of its reviewable plan (new customers are sent to a different page) says the cost is fixed only for an opening period and then reviewed at intervals, and may rise significantly with age, depending on the plan. At a review the choice may be between paying more for the same cover and paying the same for less, so on that kind of plan the sum on death is not fixed for life.

How each insurer words its premium basis, including when a level premium can still move, is on the costs page linked above. For any quote, the useful questions are which basis it is on and when the payment can change. A broker can put those to several insurers, and the form on this page is one way to ask.

Is whole of life a good investment, or a way to fund retirement?

The documents describe protection, not saving. Royal London's page for its reviewable plan says the plan "is not a savings plan" and should not be used for investment, and that any amount paid if the plan is cancelled may be far less than has been paid in. A policy that pays only on a claim cannot be drawn on while you are alive. That is the difference from investing the money: one buys a sum paid on death, the other aims for growth you can use.

Policies that combine cover with an investment fund are a different product, covered in is a life insurance policy a good investment, and older policies are on whether you can cash in a life insurance policy. Whether any policy belongs in a retirement plan is for a regulated financial adviser. Guaranteed, investment-linked and flexible kinds are compared in types of whole of life insurance.

Inheritance tax planning and putting the policy in trust

This is the advantage most often cited, and it comes with a condition. As a general position, HMRC's Inheritance Tax Manual (its page on life policies, last updated February 2018) says that where the person who dies is the life assured, the proceeds form part of their free estate and are taxable on death, while policies held in trust are normally treated like other settled property. Insurers word the trust route with hedges: Aviva's summary, for one, says payouts may be subject to inheritance tax unless the policy is in a suitable trust.

On the other side of the ledger, a trust has rules of its own. GOV.UK's guidance on trusts and Inheritance Tax (October 2024) says the tax can also apply during your lifetime when part of an estate is transferred into a trust, and Legal & General's summary notes that it may be payable on each ten-year anniversary of a discretionary or flexible trust. The manual also says that taking out a policy for someone else's benefit makes the cost of setting it up, normally the first premium, taxable as a gift. These are general rules that can change, not tax advice; whether a trust suits an estate, and which kind, is for a solicitor or tax adviser. See life insurance trusts and whole of life insurance and inheritance tax.

Questions that decide which side counts for more

  • Will the need exist whenever you die, or does it end at a date, like a mortgage? The second case is covered in term life insurance pros and cons.
  • Could the premium still be paid in old age, on a smaller income?
  • Is it guaranteed, and if reviewable, what happens to the cover at each review?
  • Is the policy to go in trust, and has a professional looked at the estate?
  • Would one joint policy change the answer? See joint vs individual life insurance.

Frequently asked questions

Why do people say whole of life insurance is a bad investment?

Because it is protection rather than investment. The Aviva, Legal & General and Zurich documents give their policies no cash-in value, and a long life can mean premiums totalling more than the eventual payout.

What are the advantages of a whole of life policy?

The payout is certain whenever death comes, provided premiums are paid and the claim is valid, so it can meet costs that arise whenever you die, such as a funeral or an Inheritance Tax bill.

What are the disadvantages of whole of life insurance?

Premiums usually run for life, the cover tends to cost more than term cover, and stopping payments ends the cover without a refund. A reviewable premium can also rise.

Is a whole of life policy an asset?

One with no cash-in value cannot be turned into money while you are alive. On death, HMRC's manual treats the proceeds of a policy on the deceased's own life as part of their estate; a policy held in trust is normally treated as settled property instead.

Anyone who would like an adviser to check what is on offer, and whether the premium is guaranteed, can send their details through the quote form here; an FCA-authorised broker follows up and it costs nothing. Other cover is in our guide to types of policy.

Sources

  • MoneyHelper, What is life insurance? (archived 3 August 2025), read 19 October 2026. web.archive.org
  • Aviva, Policy Summary of Whole of Life Insurance+ (print code AL50007 02/2026; no other date printed), read 19 October 2026. aviva.co.uk
  • Legal & General, Whole of Life Protection Plan Policy Summary (LG2588, June 2025; published on Legal & General's adviser site), read 19 October 2026. legalandgeneral.com
  • Zurich, Zurich Whole of Life Key Features (PW720505007, February 2025; sold through financial advisers), read 19 October 2026. zurichintermediary.co.uk
  • Royal London, Reviewable Whole of Life Insurance (web page for existing plan holders, undated), read 19 October 2026. royallondon.com
  • HMRC, Inheritance Tax Manual, IHTM20012: life policies and Inheritance Tax (page last updated February 2018), read 19 October 2026. gov.uk
  • GOV.UK, Trusts and taxes: trusts and Inheritance Tax (October 2024), read 19 October 2026. gov.uk