As the name suggests, 'whole of life insurance' provides life insurance cover for the whole of your life. The sum insured is paid to your dependents following your death.

Whole of life insurance is more expensive because it is certain that the life company will eventually have to pay the sum insured. Monthly premiums are invested by the insurer into a life fund.

Two types of cover exist:

maximum cover - The initial premiums and the sum insured are guaranteed not to increase for the first 10 years. After this initial period the plan is reviewed and if necessary the premiums may be increased.

balanced cover - This cover aims to balance the level of life insurance with adequate investment to support the cover in later years and maintain the original premium throughout life. This relies on the value of units invested in the underlying fund growing at a certain level each year. Increased charges or poor performance of the fund could result in the premiums being inadequate and may have to be increased to maintain the same level of cover.

Premiums will depend on the sum to be insured, your age, your sex and whether you smoke or not. A non smoker is usually defined as someone who has not smoked for at least twelve months. Premiums for women are generally lower as on average they tend to live longer.

Additional options and areas for consideration include:

• Life Fund Historic Performance: Check the historic performance of the insurance company's life funds. Poor previous performance could indicate a greater likelihood that future performance may also be poor, meaning monthly premiums may have to increase in order to maintain the same level of life cover.
  
  
• Investment Growth Rate Required: For balanced cover check the investment growth rate used to calculate your premiums. The lower this rate the better as this rate defines the minimum growth rate required by the investment in order to maintain premiums at the same level.



• Critical Illness: a lump sum is paid in the event of diagnosis of certain critical illnesses. You can save money by combining term insurance with critical illness cover. However, depending on the policy type, this may provide a single payout should death follow a critical illness diagnosis, rather than two payouts if cover is obtained separately. more



• Waiver of Premium: if illness prevents you from working your monthly premiums are paid on your behalf for a predetermined period. Check your policy for the permissible period of premium non payments. more



• Counselling: counselling may be included to help your family cope with your death.



• Trusts: can the policy be set up in a trust? This can avoid delays in money going to dependents and can avoid the risk of having to pay inheritance tax.

The terms and conditions of policies vary, so make sure you understand the scope of the cover being offered before committing yourself.