Life Assurance
The difference between life insurance and life assurance is not just the ass. Simply put, insurance provides cover for an event that might happen while assurance provides cover for an event that will happen or is inevitable. The distinction though, is more profound than that.
Life Insurance
Life insurance provides cover for a specific event and will only pay out on that event, such as the death or disability of the insured. This means that a payout is not always certain. If the insured outlives the policy for example, then there will be no payment made to the insured. That is, a payout is not always guaranteed.
Life Assurance
As indicated in the title, life assurance assures, or guarantees, a payment. This implies that an investment portion has been added to the insurance policy. Over time the value of the policy increases. The value of the life assurance policy and the investment bonus is paid out on the death or disability of the insured.
Should the policy be terminated before the insured dies or becomes disabled, the investment portion means that the life assurance policy can be liquidated or cashed in. This guarantees that a payment will always be paid out. (There are, however, penalties that the life assurance company imposes on you for cashing in the policy early.)
Life insurance and life assurance has come to mean the same thing as life assurance companies offer both forms of insurance along with other investment accounts such as pension funds and investment bonds. It’s up to each insured to determine which type of cover they would like and the exclusions and benefits of each before taking out cover. It’s important to note that most direct life insurance companies offer straight-forward life cover without an investment option. This means they do not provide life assurance.
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