Life assurance guarantees a payout after the insured person dies, regardless of when it happens. Here is what you should know about life assurance:
- Insurance companies refer to this type of cover as ‘whole of life’ cover.
- Because the cover lasts longer, premiums for life assurance tend to be higher than term life insurance. Life assurance policies can increase in coverage over time, but will not decrease.
Is life assurance right for me?
As with every insurance product, only you can make the right decision. However, it is good to understand all of the policy options to work out which is right for you.
- Taking out life assurance is a long-term financial commitment. It is important to budget for your premiums and check you can afford to pay it.
- This is a suitable choice for those that would prefer coverage that will not expire. So long as you continue to pay your monthly premiums.
- This type of insurance means that loved ones will get a lump sum pay-out when you pass away, regardless of when you die. If this is important to you, you could benefit from this type of cover.
However, if you only need cover for a set period of time, it might be more suitable to look into term life insurance.
What types of whole of life policies are there?
There are three primary categories of lifelong coverage available:
- Over 50s guaranteed acceptance cover: This type of coverage is made for people over the age of 50.
- Whole of life pure protection: Insurance providers will ask to assess your medical history during the application process. As a result, those with no medical conditions and a healthy lifestyle are ideal candidates for this type of cover.
- Whole-of-life investment-linked: This policy type comes in two forms. With-profit policies involve insurance providers investing your premiums with the aim of generating returns to cover the final payout. Unit-linked policies allow you to select specific investment funds to buy using your premiums.
- Whole of Life Policies with Critical Illness Cover: Some life insurance policies include critical illness coverage, which pays a lump sum if you are diagnosed with a specific illness.
Finding the right life cover policy can be a challenge with so much information to take in. We understand this, and that is why nowsure is here to help. Our services are free to use, and we have a team of dedicated agents ready to answer your questions when you need us.
How is life insurance different and how does it work?
Life insurance does not operate the same way as life assurance. Life insurance is a term policy which generally lasts for a set amount of time. If the policyholder dies within the contracted term duration, their loved ones would be paid a tax-free lump sum upon their death. However, there are several types of cover all with different terms, conditions, premiums, lengths and pay-out options.
The most common types of life insurance are:
Level-term: Level cover provides the same amount of coverage throughout the entire term.
Increasing term: Just as it sounds, this type of insurance can cost more over time and tends to correlate with inflation.
Decreasing term: Also known as mortgage life insurance, the level of cover decreases in time as a debt reduces.
Why do people choose a term life insurance policy?
Flexibility in terms: You have the flexibility to customise your insurance policy to match your needs. Whether you want coverage for 5, 10, 20, or 30 years, you can make the choice.
Affordability: Term insurance often comes with more affordable monthly premiums compared to permanent life insurance options. The reason for this is that there is no guarantee that the insurer will pay the death benefit. So, how do you decide which type of life cover is right for you? The outcome really depends on your individual circumstances. If you are seeking long-term security with guaranteed benefits, life assurance might be for you. On the other hand, if you only need coverage for a specific period, insurance policies offer more flexibility.