Whole of life assurance
Whole of life policies are designed to provide life assurance coverage for an individual's whole life, rather than a specified term. They contain a investment component, the idea of which is to build up a fund in the early years which will subsidise the life assurance cost in the later years. A fixed death benefit is paid to the beneficiary, this is either the sum assured or the value of the investment pot, whichever is the greater.
Premiums are usually fixed for the first 10 years of the policy, after which the policy is reviewed and each 5 years thereafter. and the premiums or the sum assured may need to be amended depending upon investment returns. Management fees also eat up a portion of the premiums.
Whole of life policies could be useful for some people to provide for an inheritance tax liability.
Funds may fall sufficiently that there may be no funds left after the 10 years therefore the policy may not cover whole life. The company may consider reviewing the policy earlier than 10 years.