How does whole of life insurance work?
Whole of life insurance works differently to other life insurance policies. You pay a premium on a monthly or annual basis. Your insurance provider then takes part of the payment to pay for the policy and invests the rest. When you die, your insurance provider will pay out a lump sum to your loved ones but the amount will vary depending on the specific details of your policy.
It’s also possible to set a whole life policy up in a trust. In which case, a payout will be made to the trustees and they’ll be in charge of distributing a sum of the payout to your beneficiaries. A whole life insurance policy is guaranteed to pay out, unless the cause of death isn’t covered by your policy or you missed a monthly payment.