Life Insurance vs Life Assurance
Joseph Kenny

People spend a lot of money on complicated financial products
and it is sometimes difficult to keep track of what products
perform what tasks. Many people are not aware of all the
financial products that are available or they only know of them
vaguely. They may not know how much they cost or the potential
benefits they offer. How can consumers make informed decisions
on what products they would be willing to buy if they do not
have this basic information? This problem can often lead to
consumers buying unsuitable of overpriced products simply
because they feel they should have some financial protections
available but don't have the details to make an informed
choice.

One of the common questions many consumers have is regarding
the difference between insurance policies and assurance
policies. Put simply, insurance policies cover the costs of an
event that might happen while assurance policies will pay out
on the occurrence of an event that is certain to happen.
Insurance policies only last for a specific period of time. If
the event occurs within that time, they pay out, otherwise they
are finished. Therefore, if no claim can be made within the term
of the policy, they have no remaining value.

Guaranteed Payout

An assurance policy is different. Assurance policies always pay
out. For example, a life assurance policy will generally pay out
upon death or upon reaching the age of 65. How does this policy
work? Well, they combine two elements; an insurance element,
which will pay out if, the person dies early. This will then be
used to pay for the funeral or support his family. But then
there is another payment made every year and this is the
investment portion. The insurance company invests this part of
the premium on behalf of the policyholder and when they reach
the age of 65, they pay this out. Life assurance policies are
therefore often used both as a method of life insurance and as
a method of saving for retirement.

Do You Need Money Now?

If you wish to cash in the investment portion of a life
assurance policy early this is generally possible. However,
there will usually be hefty penalties added to this so it is
unadvisable to cash in early if you don't have to. The
distinction between insurance and assurance is also becoming
more blurred as more companies offer both types of policy or
add features of one type of policy to their other type to make
them more attractive. The distinction is still important so
that you know what to ask for and know what kinds of facilities
are available for insuring your life and providing for your
future.


About The Author: Joseph Kenny is the webmaster of the
insurance site http://www.insure121.com/ where you will find
information, news and links to the leading providers of
insurance in the UK. If you found this article interesting you
may find more articles of the same nature in the insurance
guide located on site.