- Life Insurance and Assurance
- Differences
- Which One is Better
The Key Difference Between Life Insurance and Life Assurance
In this complex world of financial planning, understanding the differences between various insurance products is important. Two terms that are often used together but hold distinct meanings are "life insurance" and "life assurance." These two concepts are the most fundamental in safeguarding your family’s financial future and play a crucial role in decision-making.
What are Life insurance and Life Assurance?
A life insurance plan is purchased for a fixed tenure and it can range between 5 years up to when the policyholder turns 100 years. While life assurance plan is a whole life plan in which you will be covered for your entire life without any fixed period. There are no saving options in the case of life assurance.
Difference between the two at a Glance
Basis | Life Insurance | Life Assurance |
|---|---|---|
| Definition | A life insurance plan is purchased for a fixed tenure. | A life assurance plan is a pure/whole life plan. |
| Pay Out | Payout is a lumpsum amount to the nominee in of the death of a policyholder during the policy tenure | Pays out the assured amount to the nominee after the death of the policyholder. |
| Maturity Benefit | There may or may not be maturity benefits, depending on the policy. | There is no maturity benefit. |
| Term of the plan | Short term plan | Lifetime plan |
| How many claims can be raised? | Multiple | Single |
| Survival Benefits | No benefit will be received | An assured amount is released |
Which is better?
When it comes to making the right decision, there may not be one simple and straight answer. It depends on your financial goals, needs, and circumstances. Both policies have their pros and cons. So it’s suggested to consult with a qualified insurance advisor to understand which option is suitable for you.
Conclusion
In the realm of financial planning, it is necessary to distinguish between various insurance products that are offered to you. Life insurance and life assurance are some of these products. Though their features are slightly different, they both are there to protect your loved ones after your demise. The choice between these two options is not a one-size-fits-all decision. It depends on your unique financial goals, needs, and circumstances.
Difference Between Life Insurance and Life Assurance: FAQs
1. What is better- life insurance or life assurance?
The major difference is that life assurance covers you for your whole life, while a life insurance policy covers you for a set term only.
2. Why it is called life assurance instead of life insurance?
The insurer refers to life assurance when the cover is indefinite, with no fixed time limit, unlike a life insurance policy term. The word assurance is being used because the policyholder is assured that a valid claim will be paid when they die.
3. Do I need life assurance or insurance?
The decision between life assurance and life insurance depends on your specific financial needs and goals.
4. Is life assurance a good idea?
No doubt, life insurance is a smart investment but it also depends on what you want to do with the policy. But if you just want a piece of mind and want to be assured that your loved ones will be safe, term life insurance is worth it.
5. What is the purpose of life insurance?
Life insurance protects your spouse, children, or any loved one you want to protect from the potentially devastating financial losses that could result if something happens to you.
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Written By: Simran Saxena
An explorer and a curious person, Simran has worked in the field of insurance for more than 3 years. Travelling and writing are her only passion and hobby. Her main agenda is to transform insurance information into a piece that is easy to understand and seamlessly solves the reader’s query.
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