Buy a term plan and secure your family
Both of these are the types of security that are designed for paying out after the demise of the policyholder; however, they do not work in the same manner. The main difference is that a life insurance plan is customized for covering the policyholders for a particular tenure, while life assurance generally covers the policyholders for the whole life.
A life insurance plan pays out a particular sum to whoever the policyholders select in case they pass away during the tenure of the plan. There are 3 different kinds of life insurance- decreasing, increasing, and level cover.
A life plan covers the policyholders for a certain specific tenure or a period of time. This is usually the same time period such as their mortgage. They will only make payment of the premium for the tenure of the plan, and they will just be covered in case they pass away during that tenure.
The various kinds of cover do almost what they determine on the tin. The level insurance cover provides you with the same coverage amount for the entire tenure of the plan, whereas the cover amount you have will rise with the increasing cover (in order to keep up with the inflation) and decreases with the decreasing cover (in order to keep up with the fact that hopefully, you have made payment of more & more of your mortgage or other kinds of loans).
You can select a product depending on whether you wish that your cover should decrease, increase, or continue to be the same. In case you select the increasing cover, the amount of premiums will increase also. This could help you in determining which of such types of life cover suits your situation the best. Always remember that you will get cover for the tenure of the plan.
Just as life insurance, life assurance makes payment of the sum assured to whoever the policyholders select at the time of passing away. But life assurance generally covers the policyholders for their whole life, hence they are known as “whole of life” plan. Unfortunately, death is amongst one of the uncertainties in life, therefore, there is a guaranteed payout, that is, the premium amount on life assurance plans is usually higher as opposed to life insurance plans.
In the case of life assurance plans, the cover may rise in case you select but not reduce. Although there are chances the premium amount will be higher, you will have peace in the knowledge that you will remain covered for your entire life.
The coverage, which is suitable for you is based on your situation; however, you can study the basic differences between these two options before you make a decision.
For instance, in case you are looking for peace of mind that there will be coverage for your mortgage if something were to happen to you but you feel that there is no requirement for life cover after you have repaid your mortgage amount, you might be more inclined towards a life insurance plan. On the other hand, if you would wish to know a lump sum amount will be paid to your near and dear ones no matter if something were to happen to you, you may be more inclined towards a life assurance plan.
Whatever you choose in the end, make sure that you make a well-informed and suitable decision that benefits you and your family in the future.