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- Should you consider Critical Illness cover instead?
- If you have no dependants or already have Life Insurance, you should consider Critical Illness Insurance instead of Life Insurance.
- How long should you insure for?
- For mortgage protection purposes you should also insure yourself for the same number of years that are remaining on your mortgage. The initial sum insured should always equal the capital sum outstanding on your mortgage.
- Should you have a “Guaranteed” or a “Reviewable” policy?
- With a Guaranteed policy your insurance company Guarantees never to increase the premium at any time during the policy’s term.
- Should you include Terminal Illness Insurance?
- You probably won’t need to - most policies include Terminal Illness cover free of charge on all Life and Critical Illness policies.
- What is the Difference Between Critical Illness Insurance and Terminal Illness insurance?
- Critical Illness Insurance is much more comprehensive than Terminal Illness cover.
What is the difference between Life Assurance and Life Insurance?
Life Assurance has an investment value but Life Insurance does not.
Most people do not understand the important difference between Life Assurance and Life Insurance but it’s quite simple.
Life Insurance insures you for a specific period of time. Then if you die whilst the policy is in force, the insurance company pays the claim. However, if you survive to the end of the term, the policy is finished and has no residual value whatsoever. Even whilst the Life Insurance policy is in force it only has any value if you have a claim – in that context it’s just like your home insurance!
Life Assurance is different. With Life Assurance you have an important investment element. A Life Assurance policy joins a guaranteed insured sum with a none guaranteed investment, the value of the investment being directly related to the size of the guaranteed sum on your policy, the number of years the policy has been in force and Insurance Company’s investment performance.
If you were to die during a Life Assurance policy’s term, the policy pays out the guaranteed sum (just as with Life Insurance) or the value of the annual investment bonuses that had been added to the policy by the Insurance Company to date, whichever is the larger. Therefore, as the years go by the Life Assurance policy increases in value as the bonuses attached to it, build up.
However, if you survive to the end of the policy, your investment value is increased. You then get the annual bonuses plus a terminal bonus.
When a Life Assurance policy has earned an investment value via its annual bonuses, you can cash it in with the insurance company. However, most people get a far higher price for their policy by selling it to a specialist investment broker. You’ll find a number of investment brokers on the Internet who wish to buy life assurance policies.
In recent years, the investment returns on Life Assurance policies have dropped very significantly reflecting investment conditions. Furthermore, most insurance companies have placed penalties for cashing in policies early. This has similarly reduced the resale value for Life Assurance policies.
Life Insurance is much cheaper than Life Assurance and, in our experience, Life Insurance is what most people need.
Frequently Asked Questions related to the above topic.
Click below if you wish to read them: -
- Go to menu of Frequently asked Questions about Life Insurance
- Go to menu of Frequently asked Questions about Mortgage Life Insurance
- Go to menu of Frequently asked General Questions
- Should you include terminal illness insurance ?
- Should you consider Mortgage Life Insurance instead?