Life assurance is different to regular life insurance in that you are guaranteed to receive a payout.
Term life insurance will cover you up to a certain age, after which your policy expires and any contributions made will be considered “lost”. Let’s take a closer look at term and whole-of-life insurance to better understand how life assurance differs from these. Term life insurance is the most common form of life insurance since it’s the most affordable and, in most instances, makes the most sense for consumers. To understand how term life insurance differs from other types of life insurance we’ll have a look at the major life insurance options available on the market. Firstly there is credit life insurance which is generally viewed as risk mitigation for lenders; if you take out a home or car loan, this insurance policy will ensure that the lender receives full repayment in the event that you die or are diagnosed with a terminal illness. In such a case the policy will repay the lender in full and the property will be transferred to your estate or next of kin. Credit life insurance will cover only one set loan at a time and will more than likely be offered to you by your lender.
What about my Life Assurance premiums?
Your premiums will be calculated based on the loan amount and you are unlikely to have to undergo a medical examination to qualify – which is why credit life insurance will usually cost you more than term life insurance and will not provide your family with the same amount of coverage. This is why it’s generally a good idea to consider alternative life insurance policies before opting for credit life insurance. Secondly there is whole-of-life insurance is more expensive that term-life insurance because, as the name suggests it will cover you for your entire life span and since a payout if guaranteed you’ll naturally have to pay more. Death as a result of natural causes will be covered as will death by terminal illness or accident. If you opt for this type of policy it is imperative that you keep up with the monthly premiums as failure to do so will automatically result in a cancellation of your policy. With term life insurance your beneficiaries will receive a lump sum payout that is predetermined in the event that you die within the period set out in the policy and, provided that your death is a result of an accident or a terminal illness. Once this period has expired your policy is canceled. This type of policy is generally cheaper and also has a range of additional benefits – from funeral expenses coverage to free financial advisory services. Whole-of-life insurance is more expensive that term-life insurance because, as the name suggests it will cover you for your entire life span and since a payout if guaranteed you’ll naturally have to pay more. Death as a result of natural causes will be covered as will death by terminal illness or accident. If you opt for this type of policy it is imperative that you keep up with the monthly premiums as failure to do so will automatically result in a cancellation of your policy. Term life insurance is usually renewable annually however; you can select other renewal option from a 5 year to a 20 year renewal period. It is a good idea to select an annual renewal policy as you will be reminded to update the details on your policy which is very important in maintaining a fair policy. People that have a mortgage and are saving for their children’s education or are perhaps starting to save for retirement will prefer this type of life insurance policy as opposed to whole-of-life insurance since once their mortgage is paid off and their children have completed their education they would not necessarily require life insurance.
There are two main types of life assurance
The first is referred to as term life insurance and the second as whole-of-life-insurance. With term life insurance your beneficiaries will receive a lump sum payout that is predetermined in the event that you die within the period set out in the policy and, provided that your death is a result of an accident or a terminal illness. Once this period has expired your policy is canceled. This type of policy is generally cheaper and also has a range of additional benefits – from funeral expenses coverage to free financial advisory services. Whole-of-life insurance is more expensive that term-life insurance because, as the name suggests it will cover you for your entire life span and since a payout if guaranteed you’ll naturally have to pay more. Death s a result of natural causes will be covered as will death by terminal illness or accident. If you opt for this type of policy it is imperative that you keep up with the monthly premiums as failure to do so will automatically result in a cancellation of your policy.
Life assurance will cover you for the same things that both term and whole-of-life insurance will however, life assurance will either payout in the event of your death or, payout the maturity of an investment. With life assurance the amount that you are insured for increases in value with each passing year because you receive annual bonuses. If you die your life assurance will payout the lump sum that you’re insured for just as the other types of insurance policies that we’ve looked at will. The main difference arises if you live up until the policy end date in which case you’ll receive a terminal bonus in addition to the sum of annual bonuses that have been accumulating. Due to the fact that the insurance will have to make a payout regardless of whether you die before the term of the policy ends or not, life assurance is more expensive than term life insurance and in most cases, than whole-of life insurance. When it comes to life assurance premiums and benefits will vary widely from one provider to the next so it’s worth getting more than one quote to help you make a fair comparison and select the policy that best suits your needs.
