What Is the Difference Between Life Insurance and Life Assurance?
When exploring options for financial protection, the terms “life insurance” and “life assurance” may come up. They essentially mean the same thing: financial cover for loved ones in the event of the policyholder’s death.
What is Life Assurance?
The term “life assurance” is an old term for a whole-of-life policy, which means cover that lasts a person’s entire life. If premiums are kept up to date, life assurance ensures a payout, no matter when the policyholder passes away.
What is a life assurance policy?
The term “assurance” is used interchangeably with “insurance,” it most commonly refers to whole-of-life. However, it can also be used to describe term life or decreasing life insurance.
What is Life Insurance?
Life insurance is designed to cover a specific term, which can range from one to 72 years. The policy pays out if the policyholder passes away during that set period.
If the policyholder survives the term, the cover simply expires, and no payout is made. Due to this, the monthly premiums are typically lower than those for life assurance (whole-of-life policies).
Key Differences Between Life Insurance and Life Assurance (Whole of Life)
- Life insurance offers cover for a set term, which is ideal for temporary financial obligations, while life assurance covers the policyholder for life.
- Life insurance is typically more affordable, as it only covers a specific period. Life assurance usually has higher premiums, reflecting the guaranteed payout and lifetime cover.
Who Should Consider Life Insurance?
Life insurance is well-suited for individuals and families who want affordable protection for a specific timeframe, such as:
- Young families needing cover during child-rearing years
- Homeowners who want protection for the duration of the mortgage
- Individuals looking for temporary financial security during peak earning years
Who Should Consider Life Assurance (Whole of Life)?
Life assurance may be a better fit for people with long-term financial goals, such as:
- Those planning for inheritance or estate taxes
- Individuals wanting to provide lifelong support to dependents
- Policyholders looking for a guaranteed payout, regardless of when they pass away
- Those who prefer knowing their monthly outgoings for long-term planning
Pros and Cons of Life Insurance vs. Life Assurance (Whole of Life)
| Policy | Life Insurance | Life Assurance |
| Cover | Set term one to 72 years | Whole-of-life – until the age you pass away |
| Payout | Only if death occurs during the set term | Guaranteed – as long as you pay the monthly premiums |
| Premiums | Lower, cost-effective for time-bound needs | Higher, reflects lifelong cover |
| Ideal For | Temporary obligations (e.g., mortgage) | Estate planning, lifelong dependents |
Choosing the Right Policy
Deciding between life insurance and life assurance depends on your personal circumstances, financial goals, and budget. Life insurance can offer affordable cover, while life assurance provides lifelong security.
Both life insurance and life assurance play important roles in a comprehensive financial plan. By understanding the differences, you can select the policy that best matches your needs.
More from The Insurance Surgery
To explore your options and find a policy that works for you, visit The Insurance Surgery, a trusted specialist in life insurance and assurance guidance. Our team of experts will be happy to advise on the best policy for your needs and circumstances – get a quote today.
Data reference:
Health and Safety Executive (HSE): The HSE’s annual “Health and Safety at Work” report
