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Finance is a complicated topic at the best of times and there are so many points to take into account when you choose a product that touches on financial matters. For most of us we don’t understand what the difference is between the two terms, namely life assurance and life insurance. Do you know what the difference between the two is? Chances are that you don’t.
In a nutshell the term life insurance means providing cover for an event that might happen, while life assurance is the provision of an event that will definitely happen – note the difference in the words ‘might’ and ‘definitely’.
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A life assurance policy is taken out against your death or disability, ensuring that those you leave behind are not left with a shortfall or a drop in standard of living. The life insurance policy will pay out your policy to your beneficiary or beneficiaries on the sum agreed upon when you die.
Life assurance differs from life insurance in that payment will always be made out. An investment is always added along with the insured amount, which means that over the period of time the value of the life assurance policy will increase. In the event of the death of the life assurance policy holder, the amount of the life assurance policy plus the added extra investment amounts which has accumulated will be paid across to the beneficiaries.
Cashing in a life assurance policy sometimes becomes a necessity but think really hard and fast about this as this is quite a radical plan of action. The cashing in on the life assurance policy will enable you to collect the cash value of the investment bonus. Take note that you might have to pay a penalty if you cash in your assurance policy.
The area between life insurance and life assurance is a bit of a grey area, with products being offered for both types of policies that are really quite similar. This is the reason why insurance houses offer information and information guides to assist with any confusion that might arise explaining all the intricacies to the policy holder.
Making your own intelligent decisions is important when taking out vital life assurance; you will be able to glean this information from numerous sites that will assist and guide you.