What is the Difference Between Life Assurance and Life Insurance?

Life assurance and life insurance are two terms that are often used interchangeably, but they have distinct differences:

1. Duration:

• Life insurance: Designed to cover the policyholder for a specific term, usually lasting for a set period of time.
• Life assurance: Covers the policyholder for their entire life, guaranteeing a payout whenever the policyholder passes away.

1. Premiums:

• Life insurance: Premiums may be fixed or reviewable, meaning they could increase over time, but they will end when the policy term ends.
• Life assurance: Premiums are usually fixed and will continue to be paid until the policyholder passes away.

1. Cover Amount:

• Life insurance: The payout is a fixed sum, which may be used to cover specific financial responsibilities like a mortgage.
• Life assurance: The payout is typically a lump sum paid out to the policyholder's loved ones, regardless of the cause of death, as long as the premiums have been paid.

1. Investment Component:

• Life insurance: Lacks an investment component, as it only provides coverage for a specific term.
• Life assurance: Mixes investment and insurance, as it provides coverage for the policyholder's entire life and can accumulate value through annual bonuses paid by the life assurance company.

Choosing between life insurance and life assurance depends on an individual's circumstances and financial needs. Life insurance may be more suitable for those who want to cover specific financial obligations for a set period of time, while life assurance offers lifelong coverage and a guaranteed payout to beneficiaries.

Comparative Table: Life Assurance vs Life Insurance

The main difference between life assurance and life insurance lies in the duration of coverage. Life insurance covers the policyholder for a specific term, while life assurance covers the policyholder for their entire life. Here is a table highlighting the differences between life assurance and life insurance:

Both life assurance and life insurance are designed to provide financial support to the policyholder's loved ones after their passing. The choice between the two depends on individual circumstances, needs, and preferences.