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UK Life Assurance Products
Life Assurance. Many people confuse life assurance with life insurance; this is easily done, not least because of the similar spelling, but also because the products are similar in themselves. However, they are not the same thing.
Difference between Life Assurance and Life Insurance In a nutshell, the difference between life insurance and life assurance is that assurance is, in part, an investment product, while insurance is not. Life Insurance: Life insurance - much like car insurance - is only going to pay out in the event of the insured person's death. If the insurance policy expires before the person's death then nothing happens; there is no payment made to the life insurance policyholder, and the person hopefully carries on living. Similarly, much like car insurance, life insurance is purchased for some pre-determined amount of time, and remains in effect while the insurance premiums are paid. In other words, a life insurance policy has no value except in the circumstance that the policy is claimed upon. Life Assurance: Life assurance policies can be considered a combination of an insurance product and an investment product. The value of the investment portion of the product should increase over the years, as annual bonuses are added by the assurance company and, as any other investment might grow, by the companies investment performance. Additionally, there is often an extra bonus added, called a terminal bonus at the end of the term. Nonetheless, like an insurance policy, should the policyholder die, the assurance policy can be claimed upon. An assurance policy will pay either a guaranteed minimum sum or the value of the accumulated investment bonuses - whichever is the higher of the two. However, if - as you may hope - the policy expires while you are still alive, you will usually recieve a larger payment. As you might imagine, life insurance costs much less than life assurance, and, in general, life insurance tends to be the more popular of the products. However, depending on one's circumstances, both types of product can provide useful benefits. Most companies that provide life insurance also provide life assurance, and vice-versa.
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