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Types Of Life Assurance Policy

Important Points To Note About Life Assurance

  • Life assurance policies, often known as “Whole of Life Policies”, differ from life insurance in that they have no fixed time limit. The nature of life assurance is that it is on-going, and as long as you have kept up to date with your monthly premiums then, when your die, your loved ones are guaranteed to receive a lump sum payment.
  • It is important to point out that whilst a pay-out is guaranteed in the event of your death, the exact value of this payment cannot always be guaranteed. This is due to the fact that most life assurance products contain a mix of insurance and investment – with money being invested on your behalf with the goal of increasing the amount that is paid out in the event of your death.
  • Life assurance products have what is known as “review dates”. These predetermined dates enable your life insurance company to assesses how your plan in performing, and it may be necessary to either uplift your monthly payments and / or reduce the lump sum payment that will be made when you die.
  • With some life assurance polices you will find that you must continue to make monthly premiums until you die, other insurance companies will let you stop paying premiums at a set age, yet you are still covered.

Types Of Life Assurance Policy

With so many insurance companies vying for your business there are a vast number of life assurance policies to choose from. However the three key product types that you will come across (perhaps with different names attached) are as follows;

Maximum Whole Of Life Assurance

This is a relatively inexpensive form of life assurance. Most of your monthly premium goes into the “insurance pot” with the remaining amount being invested on your behalf. There are regular “review dates” when either your premiums will be increased and / or the lump sum paid out in the event of your death may be reduced.

Balanced Whole Of Life Assurance

Also commonly known as “Standard Life Assurance” – this type of life assurance has it’s premiums set at a fixed level for the duration of the policy. Quite a significant proportion of your monthly premium is invested on your behalf to try and offset these fixed premiums.

Guaranteed Whole Of Life Assurance

Just as with standard life assurance, guaranteed whole of life assurance has premiums which are set at a fixed rate for the duration of the policy. However, there is NO investment element with this life assurance product. The premiums may be more expensive than other types of life assurance policy but it does guarantee a set level of pay-out when you die.