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Life Assurance vs Life Insurance

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Last updated: 02/02/2023 | Estimated Reading Time: 4 minutes

At first glance, life assurance and life insurance might seem like the same thing. And even at closer inspection, it might be easy to pass them off as interchangeable. As the name suggests they are both similar, but it is important to understand the difference between the two if you are looking to make sure your loved ones are looked after in the case of the unforeseen.

As always we are here to help and have put together a quick but comprehensive guide to the difference between these two similarly sounding concepts to help you work out which one is right for you.

In This Guide:

What is life insurance?

As you might be well aware, life insurance is a policy that pays out money to a beneficiary in the event of your death. You pay a monthly premium safe in the knowledge that if something should happen to you, those dependent on you will be taken care of, most likely in the form of a lump sum. As with any type of insurance, there are various different policies you can take out depending on your individual circumstances.

One of the main things to think about will be how long you decide to take out the policy for. For example, a young parent may choose to take out a ten-year policy which ensures their children are secure until they reach adulthood and are able to look after themselves. One of the main things to understand about life insurance is that you are not guaranteed to receive a payout, as of course you may live beyond the terms of your agreement.

What is life assurance?

Much like the name suggests, life assurance means that you will continue to pay premiums indefinitely until you die, at which point a payout is made. So, while you know that your loved ones will get some value from your policy, it does mean that if you lived to 100 you would be paying your premiums the whole time, which may not be the best investment.

Secondly, premiums for life assurance can be a lot more expensive than their more short-lived counterparts as the insurance company knows at some point they will have to pay up. There are some instances however where you can stop paying your premiums when you reach a certain age (generally very late on in someone's life) while still safe in the knowledge there will be a payout. You can generally choose to cancel your life assurance policy but you run the risk of paying a large fee to do so.

Which one is right for me?

Deciding which type of policy to go for can be quite a difficult decision and both can be valuable securities to have if purchased correctly. Life insurance will generally be purchased if there are concerns that those close to you may struggle financially without the income of the policy holder, often in the case of someone who is the sole earner. In that instance a life insurance policy is the correct decision, making sure that no one will go hungry in the case of the unforeseen, but without risking paying a monthly premium for the next 40 years.

Life assurance, on the other hand, can be seen as more of an investment. When you die, any wealth that you pass down to your next of kin can be taxed if it is over a certain value. In some cases it makes more sense to spend that money on a policy that means that the beneficiaries get a lump sum of cash which is not going to be subject to inheritance tax. There are of course some caveats, so as with any long term financial investment it is always worth consulting a professional before taking out a policy.


How can I get the cheapest life insurance / assurance?

As with any type of insurance there will be numerous factors that come into play. Your physical health, age and profession amongst others will be taken into account. Trying to remain healthy is always a sure fire way to make sure that you are not paying through the nose for a policy.

Will a policy always pay out a lump sum?

While this is often the case there will be some instances where you may want the payout to be done over the course of months or even years to ensure the money lasts

Where can I get the best deal on life insurance / assurance?

As always with these things, the best option is to make sure you you are looking at as many different providers as possible. Fortunately, we have a handy life insurance comparison tool to help you quickly scan the market and find the policy that’s going to be best for you.

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