LIFE INSURANCE or LIFE ASSURANCE
~ Life Insurance & Critical Illness Deals
What is the difference between LifeInsurance & LifeAssurance Cover ?
The specific uses of the term "life insurance" and "life assurance" are sometimes confused. 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.
When a person insures the contents of their home or car they do so because of events that might happen (fire, theft, damage etc.) They hope their home or car will never be burglarized, or burn down, but they want to ensure that they are financially protected if the worst happens. This example of Insurance shows how it is a way of spending a little money to protect against the risk of having to spend a lot of money.
Insurance = might happen Assurance = will happen
When a person insures their life they do so knowing that one day they will die, it is just a question of when! Therefore a policy that covers until death is assured to make a payment. The policy offers lifeassurance on death; even if the policy has a prescribed termination date the policy is still assured to pay on death and therefore is a lifeassurance policy. Examples include Term LifeAssurance and Whole LifeAssurance. An accidental death policy is not assured to pay on death as the life insured may not die through an accident, therefore it is an insurance policy. (This set of distinctions does not really apply to US jurisdictions where both forms of coverage are called "lifeinsurance", perhaps where the confusion between life insurance [ sometimes mistyped as life insuance] & life assurance [ sometimes mistyped as life assuance] cover comes from?)
A "Life Insurance" policy might also be assured for other reasons. For example an endowment "Life Insurance" policy is designed to provide a lump sum on maturity. Under certain types of policy the lump sum is guaranteed. Therefore, this may also be called a lifeassurance policy.
The test of whether a policy is lifeassurance or lifeinsurance is that with a lifeassurance policy the insured event will definitely occur (at some point) whereas with a lifeinsurance policy there is a risk the insured event might occur. With regard to Whole Life policies, the question is not whether the insured event (in this case death) will occur, but simply when. If the policy has no surrender values (or cash values) then the policy is assured to pay ie; Lifeassurance
During recent years, the distinction between the LifeInsurance & LifeAssurance has become largely blurred.
This is principally due to many life insurance companies offering both types of "Life Insurance" policy, and rather than refer to themselves using both lifeinsurance and lifeassurance titles, they instead use just one; usually Lifeinsurance. In fact a typical web search for these terms show more people type in lloking for quotes for lifeinsurance than quotes for lifeassurance, even if they meant they were after the other.
Term lifeassurance pays out only if you die within a certain term. Whole of lifeassurance pays out whenever you die and some plans may or may not also contain an investment element to them. By their very nature, these plans will pay out on death whenever this may occur, so cost a lot more than term lifeinsurance plans. We currently do not advise on whole "Life Insurance" with an investment element but can refer you to a fellow IFA from the Sesame.
What is Term Life Assuance or Term Life Insuance
This is the simplest and cheapest type of new life cover, and is known as term lifeinsurance because you choose how what term or long you're covered for, say, 10, 15, or 20 years (the term).
Term lifeinsurance only pays out if you die within the term you've agreed. If you live longer than the term, you get nothing. As a couple, you can also take out term cover in both your names, with the policy paying out if either of you die during the term.
Things to look out for ...What type of lifeinsurance policy do you want? For example
- Increasing policy (where cover and premium rise over the years)
- Decreasing Mortgage policy (where cover and premium fall over the years)
- Renewable policies (which let you extend the original term).
Term LifeInsurance - Family Income Benefit
This family income benefit policy pays out income rather than a lump sum & maybe suitable for those who require income on death. This plan may be increasing to help offset inflation.
This depends on several factors, such as the amount of cover you want and the length of the term. Naturally, it's also based on the likelihood of your insurer having to pay out: if you're a smoker and do a dangerous job, you'll usually pay more than a non-smoking office worker.
Term lifeinsurance cover also costs more for men because, on average, they don't live as long. Always compare what's covered by a New "Life Insurance" policy, not just the price. Some might be cheaper than others, but they may not offer the same level of protection. Click below for a competitive term lifeinsurance or lifeassurance quotes,
FOR PROTECTION PRODUCTS WE USUALLY OFFER FROM A LIMITED PANEL OF PROVIDERS