Also known as life insurance, life assurance amounts to a contract between the insured (the policy holder) and the insurer (the company providing the insurance). Primarily, it is a form of cover that provides for the payment of a sum of money to a specified beneficiary or beneficiaries upon the death of the insurance policy holder. It can also serve as a monetary safeguard when it comes to debilitating illnesses or perhaps a serious accident that renders the insured unable to earn a living.

In other words, life assurance equates to financial protection against death, critical or terminal illnesses and disability, and typically it involves the payment of monthly premiums in exchange for a policy that guarantees such protection. The policy pay-out is usually in the form of a lump sum cash amount but can also be in the form of payments made at regular intervals as agreed to in the contract.

Usually, life insurance is taken out by the bread winner or bread winners in a family who want to ensure that their dependents will be supported financially in the event of their being unable to continue providing such support themselves in the future. In the case of critical or terminal illnesses, or of work disability resulting from an accident, say, life assurance pay-outs are in part at least to cover or help cover the cost of medication, hospitalisation and the various care givers required by the insured. Whereas in the case of insurance structured to provide cover in the event of one's demise, the benefit has to do with 'peace of mind', giving the policy holder the assurance that should he or she pass away the financial consequences of such a death would be relieved in part or entirely by way of the insurance pay-out and the effect on the deceased's family and/or other dependents would be less dire.


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