The difference between life insurance and life assurance
Getting to grips with the different types of life cover can be tricky. While people often think life insurance and life assurance are the same, they both do slightly different things. Let's give you the run-down.
What is life insurance?
Life insurance gives you cover for a set amount of time. If you die within the policy term, your beneficiaries will receive a lump-sum payment. Your loved ones could use this to help pay off the mortgage or maintain their living standards and keep pay the bills.
What is life assurance?
Life assurance, sometimes called whole of life cover, can give you protection for the rest of your life, paying out whenever you die, as long as you keep up with your payments. This type of cover can help with long-term financial planning or giving your loved ones financial protection when you die.
Choosing between life insurance and life assurance
Choosing between life insurance and life assurance depends on your own needs.
When looking at your options, you should think about:
- how much you want to spend
- how long you need cover for
- your financial goals.
If you’re looking for a more affordable option for a set amount of time, life insurance might be a good choice.
If you want cover for the rest of your life, life assurance might be a better option. While life assurance quotes are often a bit pricier, you’ll get a guaranteed payout.
How much does life assurance cost?
The cost of a life assurance policy can depend on a few different things, including:
- how old you are
- your overall health
- what your lifestyle looks like
- how much cover you need.
Tax pros and cons
There is usually no income tax or capital gains tax on money paid from a life assurance policy, but there might be inheritance tax if your policy isn’t placed in trust. This is the same for a life insurance policy.