Choosing one of the life insurance policies in India is not straightforward. It is because the decision causes you to consider the negative events that could occur in your life. Then there’s the financial side of investing in different types of life insurance policies. You may have imagined that you needed to select a life insurance policy in India from among the various options available. However, the decision on an insurance policy must be based on the amount of life insurance you require. For example, if you want to protect your family’s financial security in your absence, you should buy a term life insurance plan after carefully considering your financial needs and the many factors associated with the policy. If you wish to support long-term ambitions in your life, you could choose whole life insurance, and the factors to consider will differ. In this blog, we will understand the difference between the life insurance and Life Assurance and see which one is more suitable for you.
What is life insurance?
If you sign up for life insurance such as a term life insurance plan the insurance company will offer you a policy that promises to pay a predetermined amount to your nominee in the event of your unfortunate death. In exchange, you must pay nominal amounts known as “premiums” on a regular basis beginning with the date you signed up for the policy.
The insurance amount whichi is “promised” by the insurance company is known as “life insurance coverage” or “sum assured”. It is up to the choice of policyholder for how much amount s/he wants to buy the term life Insurance Plan. Basically the amount one chooses should ensure that their family has access to basic requirements throughout your absence.
What is Life Assurance?
Life Assurance or as it is called whole life policy is a more widespread term. It provides coverage for your entire life. There are primarily two benefits of buying a Life Assurance policy:
- Coverage for Life: You may be assured that regardless of when you die, your nominee/loved ones will receive the insurance sum and will not experience financial difficulties.
- Helps you Create Inheritance: Death is unavoidable. Even if you are unable to leave a significant legacy, an insurance policy can help build an inheritance for your family/children.
Difference Between Life Insurance and Life Assurance
The distinction between life insurance and life assurance is so subtle that they are sometimes confused as one and the same.
| Life Assurance | Life Insurance |
| The sum assured will be paid to the nominee whenever the demise of the policyholder happens | The sum assured will be paid to the nominee only if the policyholder dies during the policy term. |
| In this type of policy, the life coverage is applicable for the whole life of the life assured which is till 99 or 100 years of age. | In this, life coverage is applicable for the chosen policy term. |
| The premiums for this type of life insurance are usually on the higher side because of the indefinite length of the coverage term. | The premiums for term life insurance plan are inexpensive due to the coverage term being smaller. |
| Some of these plans include an investment element | The component of investment may or may not be present depending on the type of life insurance chosen. |
| In the whole life insurance plan, the assurance cannot be decreased | In life Assurance plans, the sum assured can be decreased. |
Life Insurance Vs Life Assurance
Life insurance and life assurance both provide peace of mind that your family will get a death benefit amount in the event of an unfortunate demise. This can be used to repay outstanding loans and liabilities, such as mortgages, or to cover other expenses. As previously stated, the primary distinction between life insurance and life assurance is that life insurance offers coverage for a specific time period, whereas life assurance provides coverage for the rest of your life. The benefit of life insurance is that the premium is lower than life assurance, and you may pick how long you want coverage. The biggest advantage of life assurance is that you will be covered for your entire life; but, if you choose an investment-linked plan, the amount your loved ones would receive during the claim is not guaranteed.
Premiums for both types of coverage will vary depending on your health, lifestyle, age, and income. For example, a young person who does not smoke and is in good health will pay less for life insurance or life assurance than someone who smokes and has pre-existing conditions.
Which is better for me?
The decision to choose life assurance or life insurance will be based on your specific needs and what you hope to achieve for your family through term life Insurance Plan or life insurance plans. If you want to ensure that your mortgage is covered in the event of your death, life insurance is the appropriate choice for you.
If you want to ensure that your family members receive a lump sum when you die, life assurance may be the best solution for you and your needs.
It’s time to wrap things up!
The distinction between life insurance and life assurance is that life insurance offers financial coverage to your family if you die during the policy term, but life assurance covers your family throughout your life. Your premium amount for both life insurance and life assurance will be determined by a number of factors, including your age, current health status, life coverage, and family medical history. Remember that the most appropriate types of life insurance policies depend on your age and particular needs.
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