Most people think that life assurance and insurance are one and the same, simply with different names. However, this is not the case at all. Each one has a completely different role and various pros and cons. So be sure to get the right one, the one that is actually the best option for you.
Life insurance coverage is for a specific period of time. Only if you kick the bucket during this period will the insurance company pay out the arranged amount of money. If however, you outlive the policy, it expires and possesses no value whatsoever. The only time you get the benefit of a life insurance policy is if you claim.
Life assurance in contrast is both a smart investment and insurance. The policy will pay out something that is equal to an agreed upon amount or the amount you have dedicated to it, whichever stands out as the highest in value at the time of the claim. The amount you have invested would depend on how long one has had the policy and paid premiums and the insurance company’s performance. Should you pass away whilst the policy is still in place, the insurance company pays out the greater value, if however, you outlive the policy, you will frequently get paid out a lot more due to being granted a terminal bonus (explained later).
Every year that the policy is in effect, the insurance company will add a bonus amount to the value of the policy, they will also often add an additional bonus at the end of the policy. This means that your life assurance policy increases each year. Just how much that you are awarded is decided by the insurance company’s performance in the investment sector. These bonuses may either be cashed in with the insurance company or sold to a specialist investment broker.
There is also the option of whole life assurance. There is absolutely no deadline (excuse the pun) for these policies. They stay in effect for your entire life span and will pay out the amount of money agreed upon or the investment value at the end of your life.
It is advisable to consult with an industry expert (a registered financial advisor) before you go ahead and getting a life assurance or term life insurance policy to determine what will be most effective for you. For older people or people with high risk jobs, it may be more worthwhile to take out life insurance, whilst those who’re relatively young and careful will benefit more from life assurance. It is all based on what your lifestyle is and what your life expectancy is.
Life assurance also tends to be costlier than life insurance, but does pay out more when the policy expires than life insurance does. So take the time to think for a while about it and choose the best option for you. Which one you choose depends on your income and preferences. I personally would take out life assurance, but that is just me, you decide for yourself.
For more information about life assurance or brokers visit the website http://www.insurance.co.za
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