Which of the following best describes a 'with profit' whole life assurance?

A 'with profit' whole life assurance is best described as one that pays bonuses based on the insurer's profit. This type of policy is designed to provide both life cover and an investment element, allowing policyholders to benefit from the financial performance of the insurance company.

The bonuses, which are not guaranteed, accumulate over time and are declared periodically by the insurer. When the policyholder passes away, or if they choose to surrender the policy, the bonuses are added to the guaranteed sum assured, potentially resulting in a higher payout than just the sum assured alone. This feature makes it attractive for policyholders seeking both protection and the opportunity for additional returns based on the company's profitability.

The other options do not accurately describe 'with profit' policies. For instance, such policies do have an investment element due to the potential for bonuses. They are not term policies, which provide coverage for a specific period without any cash value. Additionally, premiums for 'with profit' policies are often higher than those for non-profit policies due to the investment and bonus element included.