Life assurance, trying to understand the policy

[terrysgirl33]

This is a bit complicated, so I was wondering if anyone can shed a bit of light on it!

First of all, what's the difference between insurance and assurance?

DH and I took out a policy when taking out our mortgage a few years ago. We are only now getting around to working out the details, and it appears that it isn't exactly what we thought it was. The premium is now (it rises every year) aprox €100. Just under €50 of this goes towards the life assurance (€24) and the rest towards serious illness cover. The rest of the premium is saved towards the raise in cost of the cover as we get older and inflation takes hold. This seems like a very complicated policy to me. I'm not sure why the policy is recalculated every year as you get older, I thought it was calculated based on the fact that you are X age at the start of the policy and it's going to last for 15 years (or what ever).

We went back to BoI, as we bought the policy through them, and the insurance guy spent an hour going through the details, which was very good of him. However, he kept saying 'God forbid' as on GF that either of us should die. We were there to talk about life insurance, I have no problem about talking about 'if I should die' and thought that he was beeing a bit silly. Maybe this is just me...

 

[Nellie]

Insurance 'v's Assurance

Hi Terrysgirl 33,

The difference between insurance and assurance is simple - insurance is in respect of something that might happen (i.e. you might crash your car, or your house might get broker into), and assurance is in respect of something that will happen (you will die at some point). The insurance industry however sometimes uses the word 'insurance' when they could be talking about either.

Policies used as security for mortgage purposes come in different forms. The one you have sounds like (but I can't e sure) a unit linked type policy which doesn't guarantee that the premium you are paying will always be sufficient to cover the amount of life and/or serious illness cover attached to the policy. This is why it is re-costed each year.

There are other types of policies that do guarantee that the premium you are paying will always be sufficient to cover the cost of the life and/or serious illness cover attached to the policy.

As always you should probably seek independant advise regarding the policy you have. Take all of the information you have to an Independant Financial Advisor who will be able to provide you with an objective analysis of the product you were sold.