25 Jan 2024

Life assurance vs. life insurance

Life insurance and life assurance are easily confused, and while the former is perhaps better known, what exactly is a life assurance policy? In this article we’ll explain the nuances between these terms.

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What is life assurance?

Life assurance can be another way of describing a ‘whole of life’ policy. An insurer may refer to life assurance, meaning the cover is indefinite, with no fixed expiry date, unlike a life insurance policy term. The word ‘assurance’ is used because you’re assured that a valid claim will be paid regardless of when you die, so long as you pay your premiums.

What is life insurance?

Life insurance usually means that you are covered for a certain amount of time. When you apply, you choose the ‘term’ of the policy, such as 25 years. If you die within the term chosen, your loved ones could receive a cash sum. However, if you survive the term, the policy will end and no cash sum will be paid out.

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

Here are the differences at a glance between life assurance and life insurance:

An illustration which details the differences between life assurance and life insurance.

Life assurance

  • Whole-of-life cover, with a payout ‘assured’, upon death.
  • You pay more due to the indefinite length of the policy.
  • These policies sometimes include an investment element and are sold through advisers.

Life insurance

  • Cover applies over a chosen policy length.
  • Payout available only if you die within the length of the policy.
  • Monthly premiums are often cheaper.

These definitions are intended to be a rule of thumb, so make sure you have all the information you need before you decide whether a policy meets your needs.

How does a life assurance policy or whole of life policy work?

Life assurance policies offer insurance cover for the whole of your life, rather than a chosen policy length. A life assurance payout is tax-free, and provided the premiums have been paid, a claim can be made upon the death of the insured person. You’ll have the advantage of guaranteed cover for as long as you need it, but the reality is you’ll pay higher premiums for the privilege.

Who is life assurance for?

These policies are most commonly used in Inheritance Tax planning. If you’re interested in whole-of-life cover, it’s worth speaking to a financial adviser to find out if this is the right type of protection for you.

What type of policy should I choose?

Everyone’s circumstances are different, but for a lot of people, life insurance provides the right level of cover with the most affordable premiums. Many of the key chapters of your life have a defined length of time, from a child finishing school to paying off a mortgage, and the benefit of term life insurance is that you can choose the amount of cover you need, and how long you’ll need it for.

While life assurance can meet all these needs you’ll pay higher monthly premiums for an equivalent level of cover. But if you're somebody that wants cover to remain in place for life and happy to pay premiums until you die, life assurance could be for you.

What type of cover does Legal & General offer?

Our life insurance is available to buy online through our website. Getting a quote only takes a few minutes and you could be fully covered in just 20. Our life insurance calculator can help you decide how much cover you might night.

Our life assurance or whole of life policies are available to buy from our team of financial advisers. You can call today today for a quote on 0808 231 1951, 9am to 5pm Monday to Friday. We may record and monitor calls.

Is life assurance a good idea?

If you have the financial means to pay higher premiums for the rest of your life, is life assurance worth it? Here are some of the benefits:

  • Lifetime cover. You’ll have peace of mind in knowing that your ‘whole of life’ policy can protect your loved ones for the rest of your life.
  • A guaranteed payout. One difference between life insurance and life assurance is that the former will pay out if a valid claim is made during the length of the policy, while the latter pays out, in the event of a valid claim, after you die, whenever that might be.
  • Help with Inheritance Tax. A life assurance payout can be written in trust and help fund your family’s Inheritance Tax liabilities.

Legal & General life assurance vs insurance

At Legal & General we offer financial protection for a range of different circumstances. Our Whole of life protection plan, which is available from our advisers, is a type of life assurance which provides lifelong financial cover. Alternatively, our life insurance could be a more affordable option which could give you financial peace of mind for a defined period.

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