What is the difference between life insurance and life assurance?

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What’s the difference between life insurance and life assurance? 

If you're thinking about taking out life cover, then that’s a really important question. Our guide will help you make sense of the tricky subject of life insurance.  

What is life assurance?

Life assurance, often known as a whole of life policy, is a type of insurance that continues indefinitely and pays out a lump sum once a policyholder dies (assuming they’ve met their monthly premiums).

Your premium tends to be higher for this type of life insurance because a provider expects to make a pay out at some point.

Life assurance vs life insurance

Once you’ve thought about a plan, it’s time to decide if a life assurance policy is for you. It’s worth being aware that over 50s life insurance  can sometimes cover life assurance.

The term ‘assurance’ means that you’re guaranteed to be paid out upon death and typically ‘whole of life’ insurance is the main assurance product.

To help you manage what is a complex subject, our life insurance calculator can help you work out how much life cover you might need at your age.

Frequently asked questions

Who needs life assurance?

You may prefer to take out a life assurance policy if the security of a guaranteed payout is important to you. While the premiums are usually higher, other policies do not offer the 100% guarantee of a lump sum upon your death, which can make it an attractive deal.

How does life assurance differ from life insurance?

While life assurance covers you for your whole life, a standard life insurance policy usually covers you for a set term. However, some life assurance policies do allow you to finish your payments at a certain age - this varies, but tends to be around 85.

Life assurance products involve an investment approach and so tend to be more complex. We don’t offer life assurance, so you may need to speak to a financial advisor or shop elsewhere to buy this type of policy.

Which other life insurance options are available?

Your personal circumstances will dictate the best life insurance policy for you. Therefore you should think very carefully about your specific needs – be it covering bills, childcare costs, a mortgage, or protecting against a future event such as a critical illness or your own funeral expenses.

Of course, you may well have a different view on the best life insurance policy if you’re a new parent.

Which type of policy should I choose?

It depends what you’re looking for. Life insurance can provide security for those who lose someone earlier than expected. The payout can then cover a mortgage or other debts, to secure the future of those left behind. Life assurance is a guaranteed payout upon death, but the premiums tend to be higher. Having that lump sum secured is attractive for some, but it depends if you will really need it, when the time comes. If you live long enough to cover those payments yourself, you may find you no longer need cover, but have been paying higher premiums with a life assurance policy for years.

Where can I find a policy?

With monthly premiums starting from as little as £4.04**, it could make sense to start your life insurance quote with us.

What’s more, it could take only three minutes*** to do a comparison with our panel of providers. We’ll clearly lay out how much each policy might cost.

Start a quote and enjoy peace of mind for you and your family today.

**10%  of customers could achieve a premium of £4.04 per  month for their life insurance for a 10 year term, up to £100k worth of cover and no critical illness cover. Based on Compare the Market data from June 2021.

***On average it can take less than 3 minutes to complete a life insurance quote through Compare the Market based on data in November 2020.