Life Insurance provides you with insurance cover for a specific period of time (known as the policy’s “term”). Then, if you were to die whilst the policy is in force, the insurance company pays out a tax-free sum. If you survive to the end of the term, the policy is finished and has no residual value whatsoever. It only has a value if there is a claim – in that context it’s just like your car insurance!

Life Assurance is different. It is a hybrid mix of investment and insurance. A Life Assurance policy pays out a sum equal to the higher of either a guaranteed minimum underwritten by the policy’s insurance provisions or its investment valuation. The value of the investment element is then a reliant on the Insurance Company’s investment performance and length of time you have been paying the premiums.

Each year the insurance company adds an annual bonus to the guaranteed value of your life assurance policy and there is normally an extra “terminal bonus” at the end. Therefore, as the years go by your life assurance policy increases in value as the investment bonuses accumulate. The value of these bonuses are then determined by the insurance company’s investment performance. Once investment value has been assigned to the policy, you can cash it in with the insurance company. However, most people get a far better price for their life assurance policy by selling it to a specialist investment broker rather than cashing it in with the insurance company.

If you were to die during a Life Assurance policy’s term, the policy pays out the higher of either the guaranteed minimum sum or the accumulated value of the annual investment bonuses. However, if you are still living when the policy terminates, you usually get a bigger payout. This is because with most insurance companies, an additional terminal bonus is awarded.

There is a also a specialised form of life assurance called “Whole of Life”. These policies remain in force for as long as you live and as such, have no preset term.

There is also a practical difference for the internet user. Whereas you can buy life insurance online, the Financial Services Authority view life assurance as fundamentally an investment product. As such they believe it is best suited to being sold by a Financial Adviser with advice based on the Advisors full understanding of your personal details. Therefore, you will be unable to buy life assurance online. However, you can use the internet to find a suitable financial adviser with whom you can meet and discuss your requirements.

What are Life Insurance polices and Life Assurance policies used for?

Life Insurance is usually a focal point of the family’s financial protection. It is ideally suited to ensure that known debts such as a mortgage, are repaid in full in the event of the policyholders death.

When it comes to providing a lump sum for general use in the event that the policyholder were to die whilst the policy was in force, either life insurance or life assurance can be used. The differences are that with life insurance the size of payout would be preset whereas with life assurance it would depend on the guaranteed minimum and the insurance company’s investment performance. But remember, at the end of the policy’s term life insurance is worthless, whereas life assurance should payout a sizeable investment sum. In this context Life Assurance seems far more worthwhile but in practice more people elect for life insurance. Why? It’s a matter of cost. Life Insurance is considerably cheaper than Life Assurance. Furthermore, in recent years, investment returns on Life Assurance policies have fallen significantly and many insurance companies have placed penalties for cashing in policies early. This has adversely affected the resale value of Life Assurance policies.

Finally, if you want a product to provide a lump sum on your death whenever that is with a minimum payout guaranteed, you’ll probably elect for Whole of Life insurance. It’s really a form of lifetime investment with the benefit of a guaranteed minimum. They’re particularly useful for Inheritance Tax Planning.

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Not only does this wreak havoc with your internal organs and thus your health as a whole, in years to come you may decided to take out life insurance, it is after all the responsible and loving thing to do for your loved ones. When this time comes around, those extra few pounds you’ve got jiggling around may cost you more than a few jingling pennies. The reason for this is that the extra weight, although it may prove to be more aesthetically pleasing to the eye, puts the body out of its optimum working order. With your body being out of sync you increase the likelihood of developing respiratory problems, heart disease and diabetes to name but a few illnesses related to holding onto a few too many pounds.

If those few extra pounds start turning into stones then the picture becomes more dire. Official statistics show that a worrying 19% of Brits can be classified as clinically obese, in order to be labelled as such you need to have a BMI (Body Mass Index) rating of 30 or above. Sadly, statistics show that for the whole of Europe, we as a nation are rocking the fat scale in a negative fashion. The 39% of us that are overweight have made it so that we have the highest proportion of weighty matter than any other EU member state.

On the one hand one could argue that the extra pounds make us more of a nation to contend with after all, physically we’re bigger than any of the other EU members! On a serious note however the reality of being overweight doesn’t bring any smiles; as mentioned before, being more robust can have negative impact on one’s general health. It is for this reason that some life insurance providers demand a physical assessment, so that before providing you with a policy they can fully assess your starting point and thus calculate your potential path, checking to see how your current state could affect your future. Being overweight however will not stop you from getting life insurance cover it almost certainly will bump up the cost of your premiums, it may also exclude you from certain levels of cover like an ‘active’ or ‘fit’ style that caters to those that are serious about treating their body as a temple.

Some of the risk factors linked with being overweight have been briefly mentioned and is the reason why risk assessments are carried out, not just to check if you are overweight but to determine your overall level of risk. Other factors that could affect your policy include whether or not you are a smoker, heavy drinker or regularly partake in high risk activities, such as speed racing or extreme sports. When carrying out their risk assessment, insurers are looking out for a number of markers that could shunt you into the sub-prime sector. Having a BMI over 25 will class you as overweight and will almost certainly cost you when it come to the price of the policy being offered to you. Being overweight may not cause you to have an immediate chronic illness like a heart attack however it has been shown to contribute heavily to illnesses that require long term care like diabetes.

A BMI score of over 30 categorises you as being clinically obese and may mean you are refused life insurance altogether. This is because while being overweight may contribute to certain illnesses, being obese almost guarantees their occurrences. Having such a high BMI puts insurers off as they see the risk of your demise, be it sudden or over a long period of time as too high to be able to cover.

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Your family will stay focused and they will be able to control the desires of their life very confidently if you have invested in the life insurance policy. Try to fulfill your obligations and preserve to get things done in a proper manner. You should try to be methodical and comprehensive while thinking about your family’s future. You should try to work more in sorting out your family’s requirements. Your hard work will prove cooperative and encouraging concern when it will come to any prospect of life. If you have invested in the life insurance policy then, you and your family will be ready to expect the unexpected disasters you may have to face in the future. The disaster can come in any way. You can lose your life or you may get loss in the business or even you can be a victim of any prolong illness. You are on the safer side if you have invested in the life insurance policy and then you need not worry about the difficulties you may have to face. The insurance policy will take care of all the drawbacks in this case.

All should be prepared in life because we never know the next minute which havoc is going to take place in our life. We should not deny the fact that we all will die one day. We should think very practically about our life and take proper decisions. We can at least try to good a deed in life for our family and secure their future financially by investing in any of the life insurance policy so that they may not have to compromise with the expenses ever if they will have to without your existence.

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