Life Assurance
Life assurance is often referred to as whole of life cover where the policy holder makes monthly premium payments until they die at which point the policy pays the sum assured, often these type of policies are set up to pay the cost of funeral expenses or other expenses that can be linked to the policy holder passing away. As with any sort of insurance if premiums stop so does the cover provided.
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Life assurance protects against the financial consequences of death, paying an agreed lump sum when the insured person dies. The sum will normally be linked to outstanding debts or commitments for an agreed term.
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Mortgage protection will generally be linked to a decreasing balance of a capital and repayment mortgage, reducing in line with the balance until no balance remains, meaning that if a life assured dies during the mortgage being in place, the sum will provide sufficient funds to pay off the balance.
Here are the differences at a glance between Life Assurance and Life Insurance:
Life assurance
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Whole-of-life cover, with a payout ‘assured’, upon death.
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Higher premiums, due to the indefinite term length, the provider expects to pay a valid claim.
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These policies sometimes include an investment element and are sold through advisers.
Life insurance
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Cover applies over a chosen policy length.
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Payout available only if you die within the length of the policy.
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Monthly premiums are often cheaper.
These definitions are intended to be a rule of thumb, so make sure you have all the information you need before you decide whether a policy meets your needs.