How does a whole of life insurance policy work?
Simply put, it covers you for life and pays out when you die.
You’ll apply for a policy, where you’ll discuss your needs to work out how much cover you should buy.
You’ll also give details about your circumstances so that insurers can work out your eligibility and the price you’ll pay for your policy.
Once you’ve taken out a policy, you’ll need to keep up with your monthly payments (known as premiums). You’ll need to pay these until you pass away to keep your cover valid.
When you die, no matter how far into your policy this is, your loved ones can make a claim on your policy and receive a lump sum pay out.
There are also other forms of whole of life insurance, known as ‘investment linked’ whole of life insurance, where your premiums are invested during the lifetime of the policy. However, this policy type isn’t as common.