When you’re looking for the right life insurance policy, it’s easy to get tied up in jargon and lose confidence in what you’re searching for. Like any financial product, life insurance is filled with technical terms that make reading the small print feel like being back at school facing an exam you haven’t prepared for. Thankfully, most of them are actually quite simple to understand. In this blog post we’ll tackle one of the most common points of confusion; the difference between life insurance and life assurance.
The major reason why there is often confusion between these two types of policies is that they are often used interchangeably. Life insurance is the more well-known, understood term, so it tends to be used as a catch-all to refer to traditional life insurance and life assurance, and occasionally other related products. But there are differences.
The easiest way to understand the difference is to remember that insurance is based on the likelihood that something may happen, and only covers you if that something happens during a pre-determined period. For example when you insure your home, it is only protected for the period during which your insurance lasts. If anything happens when your insurance expires, there isn’t a lot you can do.
Life assurance is based on the inevitability that at some point, you are going to die. If you think about it, there wouldn’t be much point paying for life insurance if you didn’t think you were likely to pass away while still covered by it. So a true life assurance policy will cover you for your entire life. Some policies will freeze your premiums after you reach a certain age, or have been paying for a certain amount of time, and extend your cover for the rest of your life at no additional cost. Others combine the guaranteed cash value of your insurance policy with a non-guaranteed investment element that will increase in value over time, and may be dependent on the performance of the insurance company.
Ultimately, almost all insurers these days use the term life insurance fairly liberally, even though the individual policies can have wildly varying conditions and values. The best thing you can do is expect total clarity at all times, and ask a lot of questions before making a commitment to any one policy.
Price comparison websites can also help, but remember that not every company is listed on them. Don’t be afraid of resisting the hard sell. By gathering all the right information, you can be confident that you’re getting the right insurance – or assurance – policy to match your needs.
If you’re interested in taking out a life assurance policy, why not visit RIAS award-winning specialists in providing great value insurance for the over 50s.
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