These two terms are often used in place of each other but they are not the same.

Life insurance is financial protection that pays a benefit if you die during the term of the policy. The term can be any length of time, eg. 10, 20, or even 40 years but the policy will not pay out after the term has ended.

Life assurance is financial protection that is guaranteed to pay out whenever you die, it covers you for the whole of your life. It is also called ‘whole of life’ or life long cover.

Both insurance products offer a similar benefit in that they pay a lump sum benefit to your family after you pass away. However, they are not identical.

Life Insurance Vs. Life Assurance

Table of Content

What is Life insurance?

Life insurance offers protection for a specific time period, the term, which will pay a benefit if you die within the time period or term.

Life insurance can offer level cover, decreasing cover, or increasing cover, depending on the type you choose.

Level, increasing, or decreasing cover

Level cover means that the lump sum paid out stays the same throughout the term and repayments are generally fixed for the lifetime of the policy.

Increasing cover means that the amount of cover in your life insurance increases over time, usually to account for inflation, and your premium will rise each year to reflect this.

Decreasing cover life insurance is usually sold as mortgage protection as the amount of cover decreases over the term of the policy, generally in line with a decreasing mortgage balance.

life insurance cover

What is Life assurance?

Life assurance is a different insurance product which is designed to cover you until you pass away. Your family or dependents will be paid a tax free lump sum when you die.

As payout is guaranteed, life assurance typically costs more than term life insurance which will not pay out if you do not die during its term.

You can choose ‘whole of life’ insurance that offers increasing cover to allow for the effects of inflation on the lump sum. This type of life assurance may have higher premiums than level cover life assurance.

Financial planning

Life assurance offers benefits in financial planning as it may be used to pay inheritance tax for the beneficiaries of a will, pay any immediate expenses after you die, or pay funeral expenses, for example. 

‘Whole of life’ insurance can also be used to provide for care for those who may remain dependent for life such as adult children with additional needs, for example. In this way it can provide protection for your loved ones even after you die.

What is Life assurance

What is the difference between life insurance and life assurance?

A Life insurance policy lasts over a set period of time and stops when that period is over, while a Life assurance policy lasts until the policy holder dies. 

Life assurance is perfect for those later in life looking to financially help with their funeral costs, as well as leaving an inheritance. 

Life insurance is better suited to parents who want to cover the cost of living / mortgage in the event of their death while their children are still dependent.

Life insurance or life assurance? Which is better?

Which should I choose between life insurance and life assurance?

Which type of life protection is best for you will depend on your circumstances. When deciding which type of life cover to choose consider the following:

You may need to take out a mortgage protection or life insurance policy at the time of taking out a mortgage to buy your family home.

You may choose a simple decreasing cover life insurance or mortgage protection policy which will pay out the outstanding balance of your mortgage if you die during the mortgage term (which will usually be the same as the mortgage protection term).

However, if you would prefer to avail of life protection which offers a financial benefit in addition to paying off the mortgage as time goes on or you have additional debts, then a term life insurance policy will offer additional protection.

If you have children or others who rely on your income, then you may wish to purchase a life insurance policy for a term that lasts until they are financially independent.

This will allow financial security as they grow, covering childcare, school or college fees, and ongoing expenses such as health insurance and monthly bills so that if you die, the life insurance benefit will replace your income.

If you have adult children or relatives that will remain financially dependent, such as those with additional needs or care needs for example, or you wish to ensure that you leave your dependents something when you die then you may wish to choose life assurance as it is guaranteed to pay out whenever you die.

If you are concerned about inheritance tax being onerous on your children or other relatives, or you wish the family home to remain in the possession of family members, then you may need life assurance. 

Life assurance or a ‘whole of life’ policy known as a Section 72 life insurance policy can be set up in such a way as to cover the inheritance tax liabilities of your family when you die.

Life insurance and life assurance can be purchased to cover the life of a single policyholder or the life of two policyholders.

Joint or dual life insurance or life assurance policies cover the lives of both spouses in slightly different ways. A joint life policy will cover the life of two policyholders on a first death basis, i.e. the policy pays a lump sum on the death of one policyholder.

A dual life policy will cover the lives of both policyholders and may potentially pay out twice should both policyholders die. A dual life policy may be more expensive than a single life policy but not always.

The type of life cover you choose will depend on your budget. For example, term life insurance is a relatively simple product and can be significantly cheaper than life assurance. Single life cover may be cheaper than joint or dual cover.

Bear in mind also, that should you choose a life assurance policy, that the repayments will need to be affordable after you retire in many cases. Your cover may lapse if you cannot pay the monthly premiums.

You may also be offered a choice between guaranteed and reviewable premiums when choosing life cover. 

Although reviewable premiums may be cheaper when you take out the policy they may become more expensive over time as you age and they may be a false economy. Guaranteed premiums are generally fixed for the life of the policy, unless you choose an indexation option.

At the time of taking out either a life insurance or life assurance policy, you may wish to consider additional options.

A conversion option may cost a little more initially but will allow you to make changes to your level of cover or extend your cover later on without providing new medical information. This can be useful if you wish to increase your cover when you are older or have developed a health condition.

Indexation will allow you to increase your level of cover to allow for the effects of inflation on the lump sum provided in your policy. Indexation may mean that you will pay slightly higher premiums over time.

You may also wish to purchase critical illness cover when you purchase life insurance. Critical illness cover offers a lump sum should you be diagnosed with a specified serious illness during the term of the policy.

Who provides life insurance and life assurance in Ireland?

The following providers provide both life insurance and life assurance:

irish life
Zurich - Home Insurance
Aviva - Home Insurance
FBD - Home Insurance

These insurers offer life insurance only:

vhi
laya

How much are life insurance and life assurance?

Example 1

55 year old, non smoker, requires cover of €50,000.

Irish Life whole of life cover €93.78

Term life cover of 15 years:

  • New Ireland €17.26
  • Zurich €17.78
  • Royal London €18.31
  • Aviva €21.48
  • Irish Life €24.05

Example 2

30 year old, non smoker, term life insurance of 35 years.

  • New Ireland €19.76
  • Zurich €20.08
  • Royal London €21.61
  • Aviva €24.70
  • Irish Life €27.80

Get a quote for life assurance or insurance today

If you are considering life assurance or insurance, speak to Compare Insurance today. Our team of insurance experts will get you the best quote on the market for your individual needs. 

They will discuss your options with you and assess your insurance needs with you. Whether life insurance or life assurance is better for you, we can offer you a range of options and find you the best cover at the most affordable price.

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