Life Insurance / Assurance?

J2010

Hi, I'm not familiar with Insurance but have turned 30 and was thinking about getting myself some Life Insurance...

I'm in good health and was hoping to find something that would pay out a lump sum in the event of my death but I'm not sure what the difference is between Assurance and Insurance and pretty much the basics...

I noticed that the Payingtoomuch comparison site is giving me some really good monthly quotes of around £11 per month for 25 years, where the lump sum is £250k, based on a Life Term plan however I'm not sure if all Life Insurance is the same, I mean, how do I know what exactly they pay out on... Terminal Illness, Accidental etc etc?
Also, in the Critical Illness option, does that mean if I have one or if I am diagnosed with one in the future...

I'd be more inclined to go with something familiar like Aviva or Legal & General or something I've heard of before?

If anyone here has any good advice or anything please feel free to post.

Thanks
J

dunstonh

but I'm not sure what the difference is between Assurance and Insurance

Generally nothing nowadays and there is debate as to where the differences and mixing up have occurred over the years. Life Assurance is a UK term. In the US and many other countries they call it Life insurance. Some distribution channels started using life insurance instead of assurance in their title. In particular the supermarket supplied products which generally cater for the bottom end of the market. So a bit of dumbing down took place. Sometimes you see non-underwritten plans (such as the over 50s plans) use the term insurance and not assurance as technically they probably couldnt use assurance as they are not assured to pay out. However, as said, opinions on what and why the term is used will differ and I wouldnt get too worried about it.

however I'm not sure if all Life Insurance is the same

There isnt a great deal of difference. Some will have features like guaranteed insurability options which can be valuable whilst others will leave those off. Some will have guaranteed premiums, others reviewable and some yearly renewable (they can change every year).

Critical illness cover is where there are much greater differences. There is a minimum standard but many go way beyond that but the budget ones will be closer to the minimum.

I'd be more inclined to go with something familiar like Aviva or Legal & General or something I've heard of before?

There are likely to be a number of reputable financial brands that you havent heard of as well just because you have no dealing with them. So, whilst I see where you are coming from, dont necessarily rule out a company because you havent heard of it.

Murphy2011

If you are single you might find that income protection and/or critical illness might be better suited to your circumstances. Have a chat with an IFA who can suggest the best cover for your circumstances

the_insider

You get insurance to cover you incase something happens. Assurance is to cover something you're sure is going to happen. Insurance covers things like fire and accidents, assurance covers life's only certainty!

J2010

OK I'm still thinking about this and the Payingtoomuch site is bringing up some good quotes, however I've heard of little Life Insurance policies that pay you back something when the term of the policy ends... does anyone know of any good reliable comparison sites that will allow me to check some cash back policies?

dunstonh

however I've heard of little Life Insurance policies that pay you back something when the term of the policy ends... does anyone know of any good reliable comparison sites that will allow me to check some cash back policies?

These were known as endowment policies and the last mainstream provider pulled out in 2004. Endowment become a dirty word. Plus, with ISAs, there was only a small market that would see them suitable (you would need to be a higher rate taxpayer and be utilising your full ISA allowance each year and have a need for life assurance or target amount during the period of cover). A stocks and shares ISA and decreasing term assurance would nearly always be better than endowment.

You looked at this in May. Nearly a month later you have done nothing. I heard earlier this week about an adviser that recommended some life cover and the people wanted to think about it and decide the following week. They both died in that week leaving a child. The delay turned out to be very costly. you hope it wont happen to you and statistically it wont. But those it does happen to probably felt the odds favoured them too.

Quentin

dunstonh wrote: »

.....You looked at this in May. Nearly a month later you have done nothing. I heard earlier this week about an adviser that recommended some life cover and the people wanted to think about it and decide the following week. They both died in that week leaving a child. The delay turned out to be very costly. you hope it wont happen to you and statistically it wont. But those it does happen to probably felt the odds favoured them too.

Nice bit of (unnecessary) fear selling.


(Typical insurance salesman!)


OP is a big boy, (over 30) and just came back for more info!

InsideInsurance

Showing my age probably - Assurance used to be the whole of life policies, ie the ones you knew would pay out and the only questions was when. Life insurance are for a fixed term and so there is a greater element of gamble as it may never pay out but inevitably the premium reflects this.

Often in insurance (and assurance) you have a number of different parties involved and so the fact you havent heard of the sales guys isnt always a major concern as there is a much smaller number of underwriters/ actual insurers who are ultimately the ones carrying the can.

It can be worth doing your homework about quality of service as arrangements do vary from the sales brand purely doing the sale and the insurer does everything else to the sales guys actually doing everything end to end with just oversight from the insurer

dunstonh

Nice bit of (unnecessary) fear selling.

Really? How much am I getting paid for it?

(Typical insurance salesman!)

I would say what I think you are typical of but I know you would just report the post and try to get me banned.

OP is a big boy, (over 30) and just came back for more info!

The couple that died had children. So, one of them was a big boy too.

However, your response shows what a little boy you are.

jamesd

J2010 wrote: »

I've heard of little Life Insurance policies that pay you back something when the term of the policy ends

What those did internally was split the money into some for life insurance and some for investment. As dunstonh wrote the current equivalent is investments inside a S&S ISA combined with some form of life cover. These products are more cost-effective as well.

There are a limited number of similar-seeming products to the old endowments available but they are of uniformly bad value and not worth considering. Often they will exploit a claim of tax relief to make them seem like a good buy when the costs are higher and rewards lower than the split approach.

Whether you need life insurance or not depends on your circumstances. There's no point in having it if you're single with no dependants unless you're using it for something like inheritance tax planning, which doesn't fit your age. If you have dependants then you might want to have a mortgage paid off if you die, decreasing term insurance is the product for that. If you want to provide a lump sum that can be used for income for a dependant then term life assurance is likely to be cheapest. This has a set price that is likely to be fixed for the whole term, though it is possible to have some with a potential for increases. If you buy another term policy at the end the price will be higher because of your older age and likely lower health, leading to an increased risk of payout and hence a need for higher premiums. Life assurance is for a policy that you expect to continue to be paying for for the rest of your life, without premium increases but at a higher price, though again sometimes with potential for increases.

So to comment on insurance and investment needs we'd need to know more about your needs and plans.

Dunstonh was correct to point out that there is a chance of death before buying and that the chance of this is low but there. It's not a big deal but it's very unpleasant when it happens. You're looking and that's good enough for now, since it is good to have a product that you're happy with longer term and to do your learning before buying so you make an educated choice. Asking here was a pretty good move since we can ask you the leading questions that can help to refine your options.

Quentin

dunstonh wrote: »

.......I would say what I think you are typical of but I know you would just report the post and try to get me banned....

Eh????

I have never "reported" your pists or ever tried to get you banned. Something else you ought to retract!

Someone else was responsible for your ban. Or maybe you brought it on yourself?