Nowadays taking life insurance policy has become a need for everyone. But till date average man assumes that life insurance and life assurance are names for the same form of insurance. So before going to buy any life assurance or life insurance policy, first of all a person should understand what is life assurance and life insurance policy, and what is the basic difference between them.
Assurance means you are insuring for an event that will particularly happen sooner or later – death or retirement. So when you buy “life assurance”, you are arranging for a sum of money to be compensated out on your death. Life Assurance is a mix of investment and insurance. It combines a guaranteed insured sum with a non-guaranteed investment. It is a kind of insurance policy that reimburses the policy holder during death. The insurers pay a regular amount monthly or yearly just like any insurance policy. When natural death occurs, the policy then shells out money on what was being paid by the insurer. In this way, the money goes to the beneficiaries.
Insurance covers events that may appear but, equally, may not happen, such as syndrome, accident, etc. A type of “Life Insurance” would be a policy that pays out for critical bad health, known as a “critical ailment policy”. Life insurance is an agreement between the insurer and the policy owner. The insurer concurs to pay the assigned beneficiary money upon any occurrence of the insured person’s death or other even like critical and terminal illness. In response, the owner agrees to reimburse a predetermined amount (monthly or yearly.) The amount of money received by the beneficiary depends on the type of contract the insurer has agreed on having.
Difference between Life Assurance and Life Insurance
- The term ‘Insurance’ refers to providing cover for an event that might happen while ‘Assurance’ is the provision of cover for an event that is certain to happen.
- Life assurance has no time set and will definitely pay you in the end while life insurance coverage has a deadline or set time which the occurrence can happen.
- The value of money on your ‘Life Assurance’ increase over time, unlike in ‘Life Insurance’ that it stays stagnant.
- Life insurance only pays when the death is during the contract while Life assurance until the person’s death, and no expiry.