What Are The Differences Between Life Assurance And Insurance?
Life assurance sounds like life insurance but it is not the same thing.
Both were created to provide financial relief to beneficiaries when an insured dies but they have different features.
Life assurance has an investment value not possessed by life insurance. By becoming educated about these two kinds of cover, consumers avoid spending money on the wrong type.
Life Insurance Overview
Life insurance runs for a predetermined period and a claim is filed and paid to listed beneficiaries if the insured dies while the insurance cover remains in effect. If the insured survives past the cover termination date, the policy expires and does not contain residual value. Even when a life insurance policy is in force, it is similar to home insurance in that it does not possess value unless a beneficiary files a claim.
Life Assurance Overview
Life assurance contains a guaranteed benefit amount and an investment that is not guaranteed. The value of this investment is determined by the number of in-force years of the policy, the guaranteed sum amount, and the investment performance.
If the individual insured dues during the assurance policy term, the amount paid to a beneficiary is the larger of the annual investment gains value or the guaranteed sum.
The value of the investment gains tends to increase the longer the life assurance policy is in effect. However, investment value decreases if the insured lives past the termination date of the policy. In this case, the insured receives the annual gains plus a designated terminal payment.
Increases in investment value provided by annual gains permit cash-in of a life assurance policy via the providing insurance company. However, a specialist investment broker may pay a higher price and some of these individuals can be found online.
There have been significant declines in life assurance policy investment returns since the start of the financial crisis several years ago. Another unattractive feature is that some insurance companies charge penalties for early cash-in of policies. Both of these aspects have caused UK life assurance policy resale values to decrease. Recently, the market has started to improve, making life assurance a more attractive option.
Deciding on Life Insurance Vs. Assurance
Life insurance premiums tend to be lower than life assurance premiums and life insurance coverage may provide everything needed by an individual. However, anyone who is attracted to the potential of providing loved ones with a larger benefit via an investment feature might want to consider a life assurance policy.
Insurance experts will describe both options in greater detail and conduct a financial review to determine which policy is more suitable for the current and expected financial status.