Life assurance

If you don't work in the insurance business, it can sometimes be challenging to understand all the jargon involved - including the difference between terms such as 'life insurance' and 'life assurance.' While both refer to similar products, and the line has been blurred somewhat in recent years, there are still a few key differences between these two distinct types of policy that could make life insurance or life assurance most suitable for your situation.



Both types of insurance policy are designed to protect your dependents and loved ones in the event of your death or injuries. When you open a policy, you will pay in a certain amount annually in the form of premiums, which can sometimes be supplemented by other investments depending on the specific policy. These premiums will buy a certain level of cover, which can also increase, and if something happens to you the value of that cover will be paid to your beneficiaries, as long as you are still under the contracted period.

This makes life insurance and life assurance extremely valuable assets, especially if you are the main breadwinner for your family. By taking steps to protect your finances, you will also be safeguarding their financial security in the event that you are no longer able to bring income into the household.



The main difference between life assurance and life insurance is that the latter is usually more fixed, with a set period of time during which the policyholder will be covered. If you outlive the term of the policy and don’t renew it, you will find yourself without coverage, which puts you and your family's finances at risk.



By contrast, life assurance usually has no set time period, and the premiums you pay are invested, meaning the value of the policy can increase with time. If you choose to cancel your life assurance plan before the end of the term, you may also receive a surrender value, whereas life insurance policies will usually have no value.



If you are considering taking out life insurance or life assurance, it can be advisable to start investing in your future sooner rather than later. If you are young and relatively fit and healthy, you will typically pay much lower premiums than policyholders who are older and have medical problems, as insurers will deem these people to be at higher risk of cashing in on policies.



The author of this article is a part of a digital blogging team who work with brands like Standard Life. The content contained in this article is for information purposes only and should not be used to make any financial decisions.