Life Assurance | Life Insurance
Article published on 20th May 2007
Life Assurance Explained
In recent years the definitions of life assurance and life insurance have become increasingly blurred and often now refer to the same contract. At one time life assurance was a term used to describe a policy that would defiantly pay out so long as the premiums were kept up to date; two examples of this are endowments and whole of life policies. An endowment runs for a set number of years and pays out a lump sum upon event of death or maturity of the contract, whereas a whole of life policy runs for life and will pay out a lump upon death. The alternative to these 'life assurance' policies is a 'life insurance' policy which runs for a number of years and pays out on death only, for example if the policy reached the end of the term there will be no cash value.
The disadvantage, as many people are now finding with whole of life and endowment policies, is that not only are the premiums far higher but there are reviews that the policy must go through. In the past upon these reviews, it has not been uncommon for premiums to increase, which either means you pay more for the cover or you have to reduce your amount of cover to make the premiums affordable. For this reason, the old 'life assurance' plans are not favoured by most individuals in the UK and people are now leaning more towards taking out 'life insurance' for a set term.
As whole of life and endowments are no longer the popular way of insuring your life, the terms life assurance and life insurance now have little difference. You will therefore find that most companies who offer life assurance are actually offering life insurance.
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