One of the most confusing terms in the insurance arena is life insurance and life assurance. Well, it is better to know the difference so that one knows which policy to choose. Let us understand the characteristic difference between the two and how it is helpful for you.
What is life Insurance? – Definition and details
It is defined as an insurance that releases a payout in the event of the death of a policyholder. It is designed for a fixed time period which is usually between 10 and 25 years. It is taken for financial management of your family and to support the dependants with child care or mortgage costs.
Many people take it to manage the finances while their children are young and plan the end date in such a way that it coincides with the time when their family becomes financially independent.
The most startling fact about it is that you are not entitled for a payout if you do not die within the term of the policy. In case the policyholder outlives the policy, there will not be any payout or refund of premiums.
What is life assurance? – Definition and details
It is defined as an insurance that is not for a fixed term and stretches for as long as you are alive. It will cover you until your death and will ensure payout to your family or beneficiaries. It is considered as a ‘whole of life’ permanent insurance.
You need to make payments till the end of life. Some of the insurers will not want you to pay premiums once you reach the age of 85 years. They allow you to continue the policy and the beneficiaries to receive benefits at the end.
Some of the insurance providers offer life assurance as an investment product. In this case, a part of your monthly premium would be kept aside for payout while another part would be invested by the insurer. On the death of the policyholder, the beneficiaries would receive a minimum payment. However, the amount of lump sum would depend on your investment.
The policy is for a fixed term period
It remains active for as long as you are alive
On outliving policy, there is no payout
Guaranteed payout in any case
Costs comparatively lesser
More expensive than other insurance policies
It cannot be used for investment
Can be used as investment
To sum it all, you need to be sure about whether you want an assurance or insurance. Also, get all the details from the insurer and find out which one would be more suitable for you. For more details about the UK life insurance market, feel free to check our website freepricecompare.com or call us on 02034757476.
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