Life insurance and life assurance insurance are two separate types of covers that offer a different set of benefits. Both these plans are also priced differently by most Australian insurers.
Benefits of Life Protection Covers
• Life covers ensure that you get financial protection from the insurer for a specified period of time. This time frame is known as the term of the policy. If you pass away while the policy is still active then the insurer will pay a tax free compensation payout to your beneficiaries. However; if you are alive at the end of the term, then the policy has no residual value which means that you will not get any compensation payment.
Must Know Facts About Life Assurance Covers
• Life assurance plans provide a unique set of benefits since such plans are a hybrid mix of both insurance and investment. Assurance covers offer an amount equal to the higher of either the investment valuation or a guaranteed minimum underwritten by the insurer’s provisions. This value is an investment element of the cover is largely dependent on the time frame you are paying the premiums along with the Insurer’s investment performance.
• Once every year the insurer will add a bonus to the guaranteed value of the life assurance cover. Usually there is an extra terminal bonus given at the end of the term. This means that, the value of the cover will increase as the years pass and the value of the investment bonuses accumulate over the years. The value of these bonus amounts are finally determined by the insurer’s investment performance. When the investment value has been decided for a level of cover then you can choose to cash in this amount with the insurer. This being said, most policy holders get a better value for this cover if they decide to sell it to an investment broker who specialises in assurance plans.
• If you pass away while a life assurance cover is valid and the terms are active, then the insurer will pay your beneficiaries either the higher of either the accumulated value of the annual investment bonus or the guaranteed minimal sum. However if you are alive at the end of the term of the plan, you can expect a bigger payout. This happens because; insurers offer an additional termination bonus for such plans.
Whole Life Protection Covers
Another type of specialized form of life protection covers is known as the whole life insurance plan and this plan stays in force as long as you are alive since these plans don’t have a fixed term.
Insurance plans such as life covers can be easily purchased online; however life assurance covers are an investment product hence are only sold through financial advisors who can guide you and help you get a plan that is most suitable for your needs.