While insurance protects insureds from a possible event, assurance protects insureds from an inevitable event. For this reason, life insurance is often referred to as life assurance. There is however more of a distinction than that. Life assurance and insurance, though, refers to the payout term as well as the type of cover.

Life Insurance

Referring to certain types of cover, such as temporary life insurance, insurance covers insureds for a specified event. It will only payout if that event occur. This implies that there is no investment option with this type of cover. It also means that a payout is not always certain. If an insured outlives the policy without that specified event occurring, then no payment will be made.

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Life Assurance

Life assurance assures, or guarantees, that a payment will be made. Life assurance comes with an investment portion that can be drawn on or cashed in, or brrowed from. The value of this investment portion increases with time. Both the payout of the life insurance policy and the investment option are paid out when the terms of the life assurance policy are met, that is on the event of death or disability.

The advantage of a life assurance policy, though, is that should the policy be terminated before such an event happens, the investment portion is still paid out. That means, this investment is liquidated or cashed in. Even though there are penalties by the life assurance policy, life assurance guarantees that a payment will be made.

While these two definitions refer to the payout options associated to with life cover, the two terms have come to be synonymous. Life insurance companies also now offer investment options or accounts, such  as pension funds and investment bonds. By offering both life assurance and life insurance, insureds must determine which policy that meets their needs. Most direct life insurers, though, don’t offer life assurance or life insurance with an investment option. Click her to get a quote.