Life Cover Vs. Life Insurance: What's The Real Difference?

Life insurance and life assurance are both forms of protection designed to pay out a lump sum to your loved ones after you die. However, they don't work in the same way. The key difference is that life insurance covers the policyholder for a specific term, while life assurance covers the policyholder for their entire life. Life insurance will only pay out if you die during the term of the policy, whereas life assurance will pay out whenever you die.

Life insurance covers the policyholder for a specific term

Life insurance and life assurance are both forms of protection designed to pay out after the policyholder passes away. However, life insurance covers the policyholder for a specific term, while life assurance covers the policyholder for their entire life. This means that life insurance is protection for the term of the insurance cover. If the policyholder dies during the term of the policy, the insurance company will pay a tax-free sum to their beneficiaries. But, if the policyholder outlives the term of the policy, their beneficiaries will not receive any payment.

There are three different types of term life insurance products: pension term protection, convertible term life insurance and term life insurance. The most common types of life insurance are level, increasing and decreasing cover. Life insurance covers you for a specific term, or amount of time. The benefit of life insurance is that premiums will typically be lower than for life assurance, and you can pick how long you want to be covered for, and whether you want cover to remain the same or decrease over time.

Life assurance covers the policyholder for their entire life

Life assurance and life insurance are often confused, but there is a key difference between the two. Life insurance covers the policyholder for a specific term, while life assurance covers the policyholder for their entire life. This means that life assurance will pay out whenever the policyholder dies, whereas life insurance will only pay out if the policyholder passes away during the term of the policy. If the policyholder outlives the term of the policy, their beneficiaries will not receive any payment.

Life assurance provides valuable peace of mind that your loved ones will receive a lump sum in the event of your death. This can be used to pay off a mortgage, cover other essential outgoings, or both. The premiums for life assurance are typically higher than for life insurance, but the cover lasts for your whole lifetime.

The benefit of life insurance is that you can pick how long you want to be covered for, and whether you want the cover to remain the same or decrease over time. The most common types of life insurance are level, increasing and decreasing cover. There are also three different types of term life insurance products: pension term protection, convertible term life insurance and term life insurance.

Life insurance pays out a tax-free sum to beneficiaries if the policyholder dies during the term of the policy

Life insurance and life assurance are both forms of protection designed to pay out after the policyholder passes away. However, they don't work in the same way. Life insurance covers the policyholder for a specific term, while life assurance covers the policyholder for their entire life. This means that life insurance pays out a tax-free sum to beneficiaries if the policyholder dies during the term of the policy. If the policyholder outlives the term of the policy, their beneficiaries will not receive any payment.

Life insurance is a valuable way to ensure peace of mind that your loved ones will receive a lump sum in the event of your death. This can be used to pay off a mortgage, cover other essential outgoings, or both. The benefit of life insurance is that premiums will typically be lower than for life assurance, and you can pick how long you want to be covered for. You can also choose whether you want cover to remain the same or decrease over time.

There are three different types of term life insurance products: pension term protection, convertible term life insurance, and term life insurance. The most common types of life insurance are level, increasing, and decreasing cover.

Life assurance premiums are typically higher than life insurance

Life assurance provides valuable peace of mind that your loved ones will receive a lump sum in the event of your death. This can be used to pay off a mortgage, cover other essential outgoings, or both. In contrast, life insurance does not guarantee a payout as it only covers a specific term. If you outlive the term of the policy, your beneficiaries will not receive any payment.

The benefit of life insurance is that premiums are typically lower than life assurance. With life insurance, you can also choose how long you want to be covered for and whether you want the cover to remain the same or decrease over time. This flexibility allows you to customise your policy to fit your needs and budget.

While life assurance premiums are generally higher, it is important to consider your individual needs and circumstances when deciding between life assurance and life insurance. Factors such as age, health, and financial obligations can influence which type of cover is most suitable for you.

Life insurance allows you to pick how long you want to be covered for

Life insurance and life assurance are both forms of protection designed to pay out after the policyholder passes away. However, they don't work in the same way. The key difference is that life insurance covers the policyholder for a specific term, while life assurance covers the policyholder for their entire life. Life insurance is protection for the term of the insurance cover. This means that if you die during the term of the policy, the insurance company will pay a tax-free sum to your beneficiaries. However, if you outlive the term of the policy, your beneficiaries will not receive any payment.

The ability to choose the duration of your cover is a significant advantage of life insurance. It enables you to tailor the policy to your specific requirements, providing peace of mind that your loved ones will be financially protected during the selected term. By selecting the appropriate coverage period, you can ensure that your beneficiaries receive a lump sum in the event of your death within that timeframe.

When deciding on the length of coverage, it's essential to consider your long-term goals and financial obligations. For instance, if you have young children, you may want to opt for a longer term to provide financial security until they become independent. Alternatively, if you're nearing retirement, a shorter term might be more suitable to cover any outstanding debts or expenses.

It's worth noting that life insurance premiums are typically lower than life assurance due to the limited coverage period. This makes life insurance a more affordable option for those seeking financial protection within a specific timeframe. By choosing the duration of your policy, you can balance your budget and the level of protection needed to safeguard your loved ones' future.

Frequently asked questions