Would you like to make sure that your family is taken care of once you pass away? When you get older, you start to think a lot about what you are going to leave behind. In particular, people want to make sure that their loved ones are going to be financially stable when they are gone.
A lot of people start to look into insurance policies and ones that pay out upon death. In particular, individuals want to learn more about life assurance and life insurance. First of all, it is important to realise that these are two different types of policies. So, let’s take a closer look at what the difference is between life assurance and life insurance so that you can choose the best one for your situation.
What is Life Assurance?
First of all, let’s start out by defining life assurance and exactly what it is. Essentially, this is a time of life insurance. But, the difference is, there is no term limit. In other words, think about the name itself. You are assured for a pay out on the death of a policy holder. It is often called a whole of life policy. Thus, there is going to be a payment no matter what age they are. As long as the policy holder as paid all of the monthly instalments up to their death, there is going to be a life assurance policy available to family members. If this is something that you are interested in, the team at Ross & Partners can help you.
So, how does it all work? Well, the policy holder of life assurance is going to choose what the lump sum on their death is going to be for loved ones. Thus, this is how the provider is going to calculate how much you pay every month. Note, these premiums you pay can go up when you get older for a variety of reasons. But, you are going to be informed about it by your provider when this happens. There is no fixed expiry date.
The Difference Between Life Assurance and Life Insurance
So, is there really a difference between life assurance and life insurance? Well, the answer to this question is yes. The idea of them is the same in that there is a pay out when the policy holder dies. But, the agreement is different. Namely, with a life insurance policy, you are only going to be covered for a specific amount of time. In particular, you are going to agree on a term to pay premiums.
For example, this could be for 25 years. Thus, if you die within this term of 25 years, an insurance policy is going to be paid out to your loved ones. However, if you outlive your policy and live over the agreed amount of time, there is going to be no lump sum available for family.
Therefore, let’s lay out the differences between life assurance and life insurance. First, for life assurance, you are going to receive whole-of-life cover. Namely, a lump sum is assured and will be received by loved ones when you die. This can mean that you pay higher premiums since the term of the policy is unknown. But you can enjoy peace of mind and know that your family is going to receive something.
Then there is life insurance. This is something that suit those that are looking for a defined policy length. You have to remember that there is only going to be a lump sum pay out if you die within the term in the policy. Often, life insurance policies are going to have monthly premiums that are cheaper. This is going to suit some people’s financial situations and allow for there to be some financial support for families.
To answer the question; yes, there is a difference between life assurance and life insurance. With life assurance, your loved ones are going to be given a lump sum upon your death. With a life insurance policy, it will only pay out if you die within the term selected on the agreement. Both life assurance and life insurance can be beneficial for someone. But, it is going to depend on your budget and what you are after. It can be beneficial to speak to an experienced professional on the topic to ensure you make the right decision.