Glossary: Whole-of-life insurance
A life assurance policy that provides death protection for the insured’s entire lifetime but with an investment element. The insurance component pays a stated guaranteed amount upon death of the insured, and the investment component accumulates a cash value that the policyholder can either leave invested to compound up or withdraw as a lump sum or income. If left invested, the investment value is paid as an additional payment to the guaranteed death benefits. The premiums are fixed for the life of the policy and don’t increase with the age of the life assured.
Generally thought of as being interchangeable with insurance but isn’t. Assurance is cover for events that WILL happen but at an unspecified point in the future (such as retirement and death) and insurance covers events that MAY happen (such as fire, theft and accidents). Therefore you buy life assurance (you will die, but don’t know when) and car insurance (you may have an accident). Assurance policies are for a fixed term, with a fixed payout, and unlike life insurance have an investment aspect: as a life assurance policy increases in value, the bonuses attached to it build up. If you die during the fixed term, the policy pays out the sum assured. However, if you survive to the end of the policy, you then get the annual bonuses plus a terminal bonus.