Life Assurance

Life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay out a lump sum of cash to the policy owner upon their death. The policy owner agrees to pay an agreed amount to the insurer each month or once a year, which is known as the policy premium. The difference between Life Insurance and Life Assurance is that Life Insurance guards against the unexpected, whilst the latter provides financial protection against an event that will definitely occur.

Therefore, Life Assurance is often a more expensive than Life Insurance, since with Life Assurance cover the insurer is guaranteed to have to pay out at some stage. It's worth mentioning that insurers will sometimes call both types of cover 'Insurance', especially when they offer every type of Life cover on the market because overlap between products can occur. Before taking out a Life Insurance or Life Assurance policy therefore, it is very important to talk through your requirements with an insurance specialist so that you have the peace of mind of knowing that you are getting the level of protection that you expected.

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Important Tips for Buying Life Insurance

• Life 'Insurance' is different from Life 'Assurance' because it is not a certainty.  You would insure yourself against something unexpected happening, but would take out Assurance to minimise your financial exposure to something inevitable.

• If you take out any type of 'Term' insurance product, this means that you are choosing a set period of time when your cover will be active.  Beyond this period, your cover is no longer valid.

• The policy will be cheaper the less 'risky' you are to an insurer.  If you smoke, are in poor health or enjoy high-risk sports, statistically you are more likely to die, and therefore the cost of your premium will be higher.

• Joint policies for couples should be approached with a certain amount of caution.  The average joint policy pays out only after the first person dies, but for a relatively small amount more you could get separate policies with two payouts, which would have a greater benefit for your family (especially when you consider the expense of inheritance tax).