funeral flowers on a coffin

What’s the difference between life assurance and life insurance?

Don’t be fooled by how similar they sound – life insurance and life assurance are two different types of policy. Don’t be intimidated either though because the difference is straightforward. 

Here’s how life insurance and life assurance work, how they differ and the pros and cons of each type of life cover. 

What is life insurance?

Life insurance pays out a sum of money if you die during a specified period – that is, the term of the policy. Depending on the type of policy chosen, this sum of money will be made either upon your death or after a set period. All life insurance policies fall into one of two main types: Term and Whole Life. Whichever type you opt for, cover can be arranged on a Decreasing, Level or Increasing basis. All of the money you pay in premiums will go towards your final payout.

Why get life insurance?

Life insurance policies are designed to pay the funds to you, the insured person – or rather, your name dependents, tax-free. Life insurance can help to support your dependents and/or provide immediate cash at death to serve as a handy source of cash to pay your debts, funeral expenses, and income or estate taxes. Remember, even if you’ve been vigilant with your bills, you may have outstanding payments such as a mortgage. 

What is life assurance?

Life assurance is often known as ‘whole of life’ cover because it covers you for your entire life. There is no specified term (in terms of lifespan) of the policy. Some life assurance products are linked to investments. In these cases, the premium you pay each month will be split — some will go towards your final payout (as with a normal life insurance policy), while some will be invested by the life assurance provider. This means that the amount of any payout received on death will depend, in part, on how the investment part of your policy has performed. 

How does life assurance differ from life insurance?

Which is better?

When it comes to the life assurance versus life insurance debate, the following pros and cons should be considered. 

The pros of life assurance:
The cons of life assurance:
The pros of life insurance
The cons of life insurance:

Investment-linked life assurance is a specialist product, therefore it’s recommended you speak to a financial advisor if you’d like to purchase one.

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