What is whole of life insurance?
Whole of life insurance covers you until death, whenever it comes, as long as premiums are maintained. It costs considerably more than term cover and is most often used to meet a known future liability, such as an inheritance tax bill, rather than a temporary need.
Premiums are either guaranteed or reviewable. Reviewable premiums start lower and are reassessed periodically, and the increases in later life can be severe enough that policyholders lapse the cover at the point they most need it. Guaranteed premiums cost more and remove that risk.
For inheritance tax purposes, a joint life second death policy is the standard structure — it pays out when the tax actually falls due on the second death, rather than on the first, when the spouse exemption applies.
It must be written in trust, or it simply increases the estate it was bought to protect. Premiums can often be met from surplus income and covered by the normal expenditure exemption, which makes the arrangement efficient on both sides.