Everyone hopes for a peaceful life for their loved ones, even when they are not around anymore. This is the care that life insurance/assurance can offer.
Life insurance policies have become one of the basic necessities for everyone, especially amidst the rise of pandemic situations. However, before you choose a plan that suits your expectations, you must know all about it. So, let's dig into the details.
What is Life Insurance?
A life insurance plan is purchased for a fixed tenure (that can range between 5 years up to when the insured turns 100 years). The insured has to pay the premium for the plan. In return, the insurance company guarantees a lump sum payout to the nominee of the plan if the insured individual dies during the plan's tenure.
To understand better, read out the features of life insurance given below-
- It is purchased for a fixed tenure.
- The premium is mostly paid on a yearly basis.
- The nominee receives the lump sum payout (as agreed) if the insured dies during the tenure
There are two types of life insurance plan:
- Pure protection (covers only death benefit)
- Protection plus savings (offers maturity benefit as well)
- Age, health, family's health history, gender, coverage type, occupation, and daily habits (like smoking) affects the premium of your life insurance plan.
What is Life Assurance?
A life assurance plan is a pure/whole life plan. The term "whole life plan" means that you get this life cover for your entire life without any fixed period as such. The nominee of the plan receives the death benefit (assured amount as agreed between both parties) when the insured passes away. Check out the features of life assurance plan-.
- A life assurance plan is purchased for a lifetime of the insured
- Upon the death of the insured, the nominee receives the assured amount
- There is no savings option provided in a life assurance plan
- Since this a whole life plan, there is no term as maturity benefit.
Difference Between Insurance and Assurance
The table below mentions the various differences between life insurance and a life assurance policy to give you further clarity. Check it out to ease your task of deciding a perfect life cover plan-
| Life Insurance | Life Assurance |
|---|---|
| It is purchased for a tenure. | It is purchased for the whole life of the policyholder. |
| Pays out a lump sum amount to the nominee in case of the policyholder's death during the policy tenure. | Pays out the assured amount to the nominee in case of the policyholder's death. |
| There may or may not be a maturity benefit (protection plus savings plan). | There is no maturity benefit. |
| This is a short-term plan. | This is a lifetime plan. |
| Multiple claims can be raised. | Only one claim can be raised. |
| No benefit will be received if the policyholder survives the tenure. | The assured amount is released upon the death of the policyholder. |
Which is Better: Life Insurance or Life Assurance?
All the discussions may come down to one basic question "Should I go with life assurance or life insurance?". Well, there may not be one simple and straight answer to this question. Both policies have different goals and serve different needs. Hence, it is essential that you first analyse your requirements from a life insurance plan. If you are looking for a life cover that can also allow you to make savings for future/loved ones, life insurance can be a better deal. However, if you want simply a whole life cover, that would offer financial help to your family after your death, you may go with a life assurance plan. Understand the pros and cons of both plans and then make a well-informed decision.
Conclusion:
A life insurance plan is the support pillar that every family needs in case of an unfortunate event. Because this is a major life planning, do not leave any stone unturned to find the most ideal plan for yourself. Do not skip on reading the important policy documents and understanding all the terms and claim process. Also, while planning, make sure you do not compromise your premium budget, as you may have several other financial commitments as well.
Also Read: Comparison Between Child Insurance and Term Insurance
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