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 payments).

Premiums tend to be higher for this type of protection, because a provider expects to make a pay-out at some point.

Life assurance covers you for your whole life, and a standard life insurance policy usually covers you for a set term only. Certain life assurance policies do allow you to finish your payments at a certain age – this varies, but tends to be around 85.

The differences between life assurance and life insurance, in a nutshell:

Life insurance

• Usually covers you for a set term
• Can be tailored to cover specific costs like mortgage repayments or funeral costs
• May be better suited to new parents who want the peace of mind that costs are covered for their dependents if the worst should happen

Life assurance

• Covers you for the rest of your life, no matter when you die
• Offers a guaranteed pay-out, so tends to be more expensive
• Is considered more of an investment that offers a guaranteed inheritance for your beneficiaries

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 50’s life insurance can sometimes cover life assurance too.

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.

If you’re not sure which one is best for you, you should seek specialist advice.

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

Life assurance can offer the security of a guaranteed lump sum pay-out if you die. Just be aware though, that it might not cover death as a result of drug, alcohol abuse or suicide. Make sure you check which causes of death are covered before you take out the policy.

Some older policies may allow you to cash-in and receive a smaller sum before you die. However, there’s usually a hefty penalty to pay and you may end up receiving less than you’ve invested over the years. These types of policies are no longer common practice and are not available on our comparison service.

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.

It depends what you’re looking for. Life insurance can provide security for those who lose someone earlier than expected.

The pay-out can then cover a mortgage or other debts, to secure the futures of those left behind. Life assurance is a guaranteed pay-out 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.

On the other hand, if you want to leave the people you love a guaranteed inheritance, life assurance may be worthwhile.

Unlike many other types of insurance, life cover is very much a personal and emotive choice that can have a major impact on both you and the people you love. Ultimately, you’ll want to make a decision that financially benefits the people you leave behind. It could help to talk to a financial expert who can take you through your options.

It depends what you’re looking for. Life insurance can provide security for those who lose someone earlier than expected.

The pay-out can then cover a mortgage or other debts, to secure the futures of those left behind. Life assurance is a guaranteed pay-out 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.

On the other hand, if you want to leave the people you love a guaranteed inheritance, life assurance may be worthwhile.

Unlike many other types of insurance, life cover is very much a personal and emotive choice that can have a major impact on both you and the people you love. Ultimately, you’ll want to make a decision that financially benefits the people you leave behind. It could help to talk to a financial expert who can take you through your options.

LIFE ASSURANCE TYPICALLY COSTS MORE THAN LIFE INSURANCE – YOU’RE ESSENTIALLY PAYING MORE FOR THE ASSURANCE OF A GUARANTEED PAY-OUT WHEN YOU DIE.

FACTORS THAT CAN AFFECT THE COST OF YOUR POLICY ARE THE SAME AS WITH STANDARD LIFE INSURANCE. THESE INCLUDE YOU’RE:

• Age.
• Medical history, including your family’s.
• Lifestyle – how much alcohol you drink and whether you smoke can make a big difference to the cost of your policy.
• Sum insured – the amount of compensation you want your beneficiaries to receive.