What is the difference between life insurance and life assurance ?
Should you care?
Yes!!
The world of finance is extremely complicated and there are many factors to consider when choosing any financial protection product.
Hot Topics
- What is the difference between Life Insurance and Life Assurance?
- Many people confuse Life Assurance with Life Insurance but there are several big differences between the contracts.
- What is Level Term Life Insurance?
- Level Term Life Insurance is a form of insurance that pays a lump sum to you or your family if you die or fall terminally ill whilst the policy is in force.
- Does a UK Life Insurance policy work abroad?
- Life Insurance contracts offered by UK Life Companies are legally constructed to apply to people living in the UK and can be sold only to a UK resident at the time the policy is sold.
- Laws and Life Insurance
- The following Questions represent the legal aspects of Life Insurance we think you will be most interested in. The information is not definitive nor is it exhaustive but simply an introduction into the legalities involved.
When looking for a policy you need to know what you are looking for and what is on offer in order that you get the right cover for your needs.
One thing that many people find confusing is the specific use of the term "insurance" and the use of "assurance". What are the differences between them?
In general, the term insurance refers to providing cover for an event that might happen while assurance is the provision of cover for an event that is certain to happen.
For the purposes of financial provisions, a life insurance policy provides cover for a set period of time. If the worst were to happen during that time (and there are no complications), then the insurance company will be required to pay out the agreed sum to the beneficiary. The only time the policy has any real monetary value is if there is a claim made for payment as a result of an event triggering that claim, such as the death of the person ( loans )covered. If the person outlives the term of the policy, then the insurance policy will cease and no payment will be made.
Life assurance is different from insurance, and will always result in a payment. This is achieved by combining an investment element along with and an insured sum. This means that over time the value of the policy can increase as the investment bonuses are added. If a person ( cheap life insurance ) covered by life assurance were to die, then the insured sum would be paid out, alongside the investment bonuses which would have accrued over time. If it is necessary to cancel the policy prior to the end of any designated term period, or the death of the life being covered, then once an investment bonus has been added, the life assurance policy will have an encashment value. It is therefore possible to cash in a policy earlier than its usual termination date, in order to collect on the investment portion. It should be noted that many insurance companies place penalties for cashing in policies early.