Many
people consider life insurance and life assurance as same but actually they
perform different kinds of financial roles and are offered at different rates. But
before I explain major differences between these two terms that is life
insurance and life assurance, let me tell you that why need to get assured.
For
youngsters, planning for future is not an easy task and it requires a lot of
time. Taking into account from where you would get the time to shop such
products while trying to maintain the balance between your personal and
professional life. But if all things in life were foreseeable, death of course
can’t be foreseen. However, when you die, do you see your spouse and children financially
safe and sound for the rest of their life? If you don’t, you need a Life
Assurance Taxation UK policy. Life insurance is a protection
against the loss of income that would result if the insured passed away. The
named beneficiary receives the proceeds and is thereby safeguarded from the
financial impact of the death of the insured.
On
the other hand, life assurance is a different thing. It’s a hybrid combination
of insurance and investment. Life assurance policy pays out a sum of money
equal to the higher of either a minimum underwritten by the policy's insurance
clause or its investment valuation. The value of your investment depends on the
performance of your insurance provider as regards their investment and growth.
Every
year, the life assurance provider will add an annual bonus to the guaranteed
value of your assurance policy. Also, he will add a terminal bonus at the end
of your term. Hence, as the time passes, the value of your life assurance
policy increases due to addition of investment bonuses. But unlike life
insurance, if you die during your life assurance term, your insurance provider
would pay out the higher of either the guaranteed minimum sum or the accrued
value of the annual investment bonuses.
Provided
your life assurance policy is a "qualifying policy" the benefits paid
are not subject to income tax. To qualify, your policy has to satisfy certain
statutory conditions. These include providing a minimum sum insured payable on
your death. Also, premiums have to be payable at annual or shorter intervals
for at least 10 years or until your earlier death. If you are a higher rate tax
payer and surrender the policy within the first 10 years, some income tax may
be payable. For professional advice on life assurance taxation in UK, visit http://www.medicsfs.com/financial-services/life-assurance/taxation.php
