What Is The Difference Between Life Insurance And Life Assurance

A life insurance policy offers your family and loved ones financial security and helps to safeguard their future. In the event of your death, such a policy would pay out a guaranteed sum which would vary depending on your age, gender and monthly payments. Many people do not like to think of such a scenario – it is quite a morbid subject – and would rather not think about what might happen if they died. But a life insurance policy offers a great deal of reassurance and security, and would mean that your family would not be burdened by financial worries if the worst were to happen.

Some people are confused about life insurance and assurance – they are slightly different. Insurance covers for a defined term – for example an annual motor insurance policy. Life terms are for a stated number of years and then cover stops. Assurance refers to an event that is assured to take place – the policy is for an insured’s whole life, unless it is cancelled, thus the event will definitely happen at some point.

Life assurance policies usually have some kind of investment element attached to them. Part of the monthly payment is invested into a savings fund which is intended to grow. At the end of the policy, this type of policy may have a useful investment fund to add to the minimum sum assured.

A term insurance policy will pay out a fixed, defined sum to the beneficiary or trustee upon the death of the insured. An assurance policy will also pay out any extra amount that has grown from the sums invested by the fund managers. Such extra payment has no guarantees, however, and cannot be relied upon.

Market conditions in recent years have not been favourable and as a result many stock market funds have performed quite poorly. This is reflected in the poor returns currently available on life assurance products. In fact, it is often possible to obtain a better return by allowing a specialist broker to buy the policy although this approach may carry fixed penalties.

The words ‘life insurance’ and ‘assurance’ are often found when people are searching for the correct policy for themselves. Many people think that they mean exactly the same thing, but we have seen that they do have a subtle difference. A term insurance policy is usually the cheaper option due to the fixed term.

If you want more information about the types of life cover available, including critical illness cover and mortgage protection, then visit www.premiumlifecover.co.uk to speak with a qualified advisor.