Many Individuals consider life assurance and life insurance as same, however, there is a minor but important difference between the both: life insurance provides coverage for a fixed tenure, whereas life assurance provides coverage for the entire lifetime.
Let’s discuss these terms and the difference between them in detail:
Life insurance is the best way to build wealth and protect your family members financially in the event of the unfortunate death of the policyholder. Life insurance plans can be availed through term insurance plans and savings plans. In this, the insurance company promises to pay a specified amount of money to your family or the appointed nominee, in case of any eventuality, in exchange for regular premium payment over a time period. These payments are called premium amounts which are generally paid on yearly basis.
So, in case of the policyholder’s death or if the plan matures, the insurer shall pay the individual or his/her family a lump sum amount after a fixed time. There are different types of life insurance plans to suit the individual’s requirements.
Just as life insurance, the life assurance plan pays out a tax-free amount to the policyholder’s nominee in case of unfortunate death of the policyholder. Though, life assurance generally coves the life assured for their whole life – it is also called as ‘Whole of Life’ cover.
Life assurance meaning: Life assurance is a plan in which an insurance company pays reimbursement for a fixed occurrence like death. Assurance plans offer continuous life cover until the death of the policyholder. For example, a whole life plan provides financial security for the remaining life of the policyholder.
Life assurance policy offer life cover for the entire lifetime, rather than a chosen policy term. A payout of life assurance is free of taxes and provided the premium amounts have been paid, a claim can be processed upon the policyholder’s death.
Following are the differences between life assurance and life insurance:
|Life Assurance||Life Insurance|
|It helps to reestablish financial stability during an unfortunate event.||Pays out the sum ‘assured’ when any unfortunate incident takes place|
|The whole of sum assured, with an ‘assured’ payout upon death||Life cover applies over a chosen policy term.|
|The high amount of premium because of the indefinite length of the term||The monthly premium amounts are inexpensive|
|These plans sometimes include an option of investment are sold through agents||No element of investment|
Life insurance and life assurance, both provide peace of mind that your family will receive as a lump sum in case of your unfortunate demise. This can be used either to pay back all the mortgage or to cover other requirements. As discussed, the main difference between the both is that life insurance provides you coverage for a set tenure whereas life assurance provides you coverage for your entire life. The advantage of life insurance is that the premium amount is lower than the life assurance and you can choose for how long you want coverage. In life assurance, the main advantage is that you will get the cover for your whole life, although if you select an investment-linked plan, the sum your loved ones will get during the claim is not guaranteed.
Premium amounts for both types of coverage will depend on your health, lifestyle, age, and income. For example, a young individual who is a non-smoker and is in good health will pay a lesser amount for life insurance or life assurance than an individual who is a smoker and has pre-existing ailments.
The decision of opting for life assurance or life insurance will depend on your individual requirements and what you are looking out for your family from this type of life cover. If, for example, you want that your mortgage will be covered in case of your death, then life insurance is the right option for you.
If you want peace of mind that your family members will receive a lump whenever you die, life assurance may be the right option for you and suits your requirements. Ultimately, the choice is yours.
The best way to remember the difference is that life insurance provides you coverage if you die within the policy term, but life assurance is there for you the whole of your life. In all types of insurance, your premium amount will depend on your current health status and medical history.
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