Is Life Assurance The Same As Life Insurance?

If you're looking to buy life insurance, you may have also come across the term 'life assurance'. So are they similar to each other or not? Well, yes and no. Read on to learn what similarities they share as well as the key differences that set these policies apart.

What is life insurance?

Life insurance is often used to describe a specific type of cover known as term life insurance. With this type of policy, you choose how long you want the policy to last (for example, 20 years). The policy will pay out a lump sum if you die within this time. If you survive, there will be no payout and your cover will expire.

There are 3 main types of term life cover:

• Level term cover - which had a fixed premium and payout value. Even as you get older, your premiums won't increase, and the policy will still pay out the same amount.
   

• Decreasing term cover - which is mainly used to cover a repayment mortgage or similar debts. The policy stays in line with your mortgage balance, decreasing the payout value as the debt reduces. The premiums are fixed, but are generally cheaper than level term insurance.
   

• Increasing term cover - which increases the payout over time to protect the value from inflation. Because of this, the monthly premiums can also increase.

What is life assurance?

Life assurance is known by most insurers as whole life insurance. As you may have guessed, the policy covers you for the rest of your life, meaning it doesn’t expire after a certain number of years like term life insurance does.

As long as you continue to pay your monthly premiums, the policy will pay out a lump sum regardless of when you die. 

Like term cover, it can be purchased as level or increasing. 

Because it offers greater security, and potentially a guaranteed payout, the premiums for life assurance tend to be more expensive compared to a standard term life insurance policy.

What's the difference between the two?

There are a number of differences that set these policies apart, including:

• Cover length: Life insurance has an expiry date, whereas cover for life assurance is ongoing.

• Cost: Premiums for life assurance are often more expensive than for life insurance as cover tends to last longer.

• Purpose: As the cover is often shorter, life insurance can be tailored to obligations, such as mortgage payments or until your children are financially dependent. Whereas life assurance can be used to cover future expenses, like retirement planning.

Which is better, life assurance or life insurance?

Both types of policies can offer suitable financial protection for you and your loved ones, but it depends on your circumstances.

If you wish to be covered permanently, life assurance (whole life insurance) may be the better option. It guarantees a payout no matter when you die, as long as premiums are paid. This can be useful if you're looking to leave a legacy, cover funeral costs, or build a financial safety net for your family.

On the other hand, if you want cover for a specific period, like while you pay off a mortgage, raise children, or support a spouse, life insurance (term life insurance) may be more suitable. It's generally more affordable, especially if you're young.

Where can I get protection?

If you've decided which type of cover you need, you can apply for a quote online through Cavendish Online. We can provide affordable quotes for both life insurance and life assurance for leading brands.

However, if you're still unsure about your options, our friendly advisers can provide you with guidance on choosing a policy. This also applies to those with medical disclosures or hazardous occupations. You can call our team on

01392 436 193 

(Monday to Thursday 9am – 5.30pm, Friday 9am – 5pm)