The major difference between Life Assurance and life insurance is that Life Assurance
has an investment value but life insurance does not.
life insurance insures you for a specific period of time - and 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 ends and has no value - in that context it's just like your home insurance!
A Life Assurance policy combines a guaranteed insured sum with a non-guaranteed investment.
The value of the investment is directly related to the size of the guaranteed sum on your
policy, the number of years the policy has been in force and the investment performance
of the insurance company.
If you were to die during a Life Assurance policy's term, the policy would pay out the
guaranteed sum (this is what you would get with life insurance) OR the value of the annual
investment bonuses that the Insurance Company have added to date, whichever sum is larger.
As the years go by, the Life Assurance policy increases in value as the bonuses attached
to it increase in value - so the longer into the policy you die, the larger the pay out.
However, if you survive to the end of the policy, the investment value will reach its
peak, and you will get all the annual bonuses plus a terminal bonus.
When a Life Assurance policy has built up an investment value
via its annual bonuses, you can either cash it in with the insurance company or sell it
to a specialist investment broker. You'll find a number of investment brokers on the Internet
who wish to buy life assurance policies, and they are often prepared to pay more than the life assurance company.
In recent years, the investment returns on Life Assurance policies have dropped very significantly
because investment conditions have been poor. This, along with the fact that most insurance
companies have started charging penalties for cashing in policies early, means that life
assurance policies are not as popular as they were.
life insurance is much cheaper than Life Assurance because it has no investment value - we
have found that life insurance is what most people need.
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