Beginner’s Guide to Life Assurance…

Life assurance (sometimes known as life insurance) is probably the most important insurance policy that you can have. It is designed with one goal in mind, to answer the question “what would happen financially to those nearest to me if I were to die?” Policies vary greatly and you have to be careful when taking out a policy that it meets all of your requirements.

Why Assurance not Insurance

You may have seen products like Legal and General Life Assurance, and wondered what ‘assurance’ is. Assurance is an insurance policy for something that is ‘assured’, something that will definitely happen. In general, in the UK, you get life assurance because it’s a sure thing that you will die. However, it’s not guaranteed that you will die within the term of the policy, so fixed term policies often come under the heading “life insurance”.

Basic Policies

Many people assume that life assurance will cover all their finances in the event of their death, unfortunately, this is not the case. A basic policy will agree a certain payout within a certain time frame, and that is it. Other policies can usually be included with a life assurance policy (for a higher premium), popular options are ‘critical illness cover’, ‘mortgage assurance’ and ‘funeral cover’. For someone with a young family, mortgage assurance is probably the most important, though critical illness cover is worth looking at.

Are Costs Fixed?

There’s a great amount of variation in the life assurance market, and some providers offer markedly better deals than others (although you should always be wary of what’s in the small print). Life assurance, perhaps more than any other product, is worth considering extremely carefully and shopping around, after all, it’s the only policy that you don’t want to pay out, and the only one that you can’t help deal with in the event of it paying out. Make sure you do your research, check out a comparison website or three, and don’t compromise premium costs for quality of coverage.

Is It Worth Having?

Ultimately, you will have to answer that question yourself, however, if you don’t have anyone who is directly dependent on you, the answer is probably ‘no’. It may be worth looking at a ‘whole life insurance’ plan which has certain inheritance tax benefits attached to it. If you have a young family, or a loved one that relies on your income, then a life assurance policy is certainly worth the cost of the premiums.