Life insurance is quite popular among the classes of insurance in Nigeria. Popular as it may be, most people including those who are into any form of life insurances do not know the difference between life insurance and life assurance. Unfortunately, the industry is not still playing the needed awareness creating role that is expected of it. Many players even in this global age are yet to fully adopt modern technology in doing the business, preferring to stick tenaciously to the conservative pattern which held the industry captive for decades. People spend much money on complicated financial products and it is sometimes difficult to track which of these products they keep the tasks to perform. Knowing the basic information of your expected type of coverage, would help to guarantee informed buy. This neglect could cause disagreement between insurers and the insured, with consumers buying overpriced products that may not be suitable to their needs simply because they feel they should have some financial protections, without having knowledge of details of their choice.
One of the most frequently asked questions in relation to many consumers is the difference between insurance companies and policyholders. Simply put, insurance companies cover the cost of an event that happens as long as the policyholder pays the needed premium in the occurrence of an event that could certainly happen. One thing about this type of insurance is that the insurance company only pays once or a certain time in the occurrence of the insured event. Therefore, if no claims are made within the period the policy is made, then they have no residual value.
But for an assurance policy, it is different. One notable feature about an assurance policy is the guaranteed payment. Assurance policies always pay off. For example, life insurance generally pay at the death of the insured or upon reaching the age of 65 years of age. How does this policy work?  Assurance policy combines two elements. That is an insurance element that will pay off when the person dies early. This is then used to pay for the funeral or the support of his family. But then there is an additional payment each year and that is the investment portion. The insurance company invests this part of the premium on behalf of the insured and upon reaching the age of 65 this money is then paid out to the insured. Life insurance policies are therefore often referred to as a method of life and as a method of saving for retirement.
It may not be easy to withdraw cash early from the investment portion of life insurance, although it is possible in principle. However, there are usually some penalties attached to this. It is advisable not to cash in early if you do not have strong reasons to do so. The distinction between insurance and assurance is also more and more blurred. Some insurance companies offer both types of policies or functions as a new kind of policy added to another in order to make them more attractive. Important as this distinction may be, it is important that the insured knows know what it is and also demand to know what type of facilities are available for the insurance of your life and provision for the future.On the other hand, Term insurance is the most common in life insurance. It is one of the several types of insurances that cover the insured only for a certain defined time. The term of the insurance stipulates that that is the only time to pay the insurer as the need arises. It is the most common in life insurance. Term insurance is also one of the cheapest ways to insure. But what makes this the right choice?
This class of insurance is used by many. It is one of the cheapest ways to stay insured. The operation is simple. You pay for the insurance, like any other insurance. Under this cover, if the insured dies during the period that the policy is in force, the insurance company will pay as the policies described. But if the person dies after the expiration of the insured term, then the insurance company is not likely to pay, as the insurance covers only the death that occurs during a stated period.
Why would anyone want to take this kind of policy?  The fact is that this type of insurance has some advantages, especially when you consider why you need insurance in the first place. If the insured dies, there is provision that could cater for the family left behind.
It is important that the insuring public make careful choice having understood the different provisions of these classes of insurance. The decision as to whether this is the right kind of insurance for your needs is necessary. It takes a lot of understanding, but understanding the difference between each type of insurance would be of immense help to the insuring public.