Life insurance and life assurance are both types of protection that pay out when a policyholder dies, but they don’t work in the same manner. The main distinction is that life insurance is designed to cover the policyholder for a set period of time, whereas life assurance typically protects the policyholder for the rest of their lives.
What is life assurance?
Life assurance is a sort of life insurance that lasts indefinitely, with the only way for it to cease being if the policyholder dies or stops paying their monthly premiums. As long as you keep paying payments on your life insurance policy, it will pay out at whatever age you die. When you die, life assurance, like life insurance, gives a tax-free payment to whoever you choose before your passing.
Life assurance generally covers the insured person for the rest of their lives. Your cover can increase, but not reduce, and while your premiums will likely be greater, you will have the comfort of knowing that you’re covered for the rest of your life. Like with life insurance, there are many types of assurance, such as business life assurance.
What is life insurance?
Life insurance is a contract made between an insurer and an insurance policy holder in which the insurer must pay a specified beneficiary a certain amount of money in the event of the insured person’s death. Life insurance essentially protects your loved ones by paying a tax-free payment to the beneficiary.
There are many forms of life insurance, including business life insurance, group, personal, couple and term:
Business Life Insurance
This is insurance which can financially support your business if something unexpected and critical happens to you, your employees, partners, or stakeholders.
Term Life Insurance
For a specified period of time decided by you, term life insurance provides financial cover after your passing. You decide the duration of the policy length and how much cover you need which could insure the length of a mortgage. You will receive a pay-out if you die or develop a qualifying terminal illness during the duration of your life insurance policy.
Group Life Insurance
This is a fixed-term policy that covers a group of people instead of just one person. Employers typically use it to provide death-in-service benefits to their employees. In most cases, the employer pays the entire premium for group life insurance. A pay-out will be given to the employee’s family or beneficiary if they pass away.
Individual Life Insurance
Individual life insurance protects only one person and pays out the amount of coverage chosen if they were to pass away during the policy’s term.
Which is for you?
A life insurance policy may be worth considering if you want the assurance that your mortgage will be paid off when you die, but don’t think you’ll need life insurance once your mortgage is paid off. A life assurance policy, on the other hand, may be worth considering if you want to know that a lump sum will be given to your loved ones regardless of when you die.