A small number of insurance companies offer life insurance that insures you for your whole life, or for as long as you want to keep paying premiums. These are less common than term life policies, as the premium is higher for the same level of benefit and can increase every so often. There are various types of whole-of-life policies, but the most common is a unit-linked whole-of-life policy.

With this type of policy, the life assurance company invests your premium in a fund. They manage the fund so that it is expected to grow at a certain rate and to increase in value over time. The fund value is not guaranteed. It may grow by enough to pay for your life insurance throughout your life. Or, in some cases, it may fall short of what's needed to pay for your life insurance. In that case, your premium may have to increase by a large amount to keep your sum assured or policy benefit at the agreed level. Or, you would have the option of maintaining the same premium but reducing the sum assured.

It is important to realise that a whole-of-life policy has ongoing charges, such as yearly charges for managing the fund and sometimes monthly charges for handling your premium. Charges have the effect of reducing the value of the policy fund. However, the effect of these charges is taken into account when your premium is set.

Can I get a whole-of-life policy where the premium is fixed?