The fundamental purpose of Life Assurance is to provide money to meet financial losses caused by death, disability and illnesses. However, Life Assurance policies may also provide investment benefits that is, money payable on survival of the life assured rather than only on death.

In some circumstances you can also have policies that pay out benefits if the policyholder suffers a critical illness.

There are two main elements of Life Assurance.

These are:-

Protection - income and security for dependents after the death of the life assured

Investment - the creation of capital from regular savings

A life assurance product can be made up of either or both of these two elements.

Life Assurance policies are paid for by premiums. A premium is made up of three elements.

P	=	PROTECTION	The cost of the life cover or ‘risk’
I	=	INVESTMENT	The amount, if any, of the investment content
E	=	EXPENSES	The expenses of the life company

The Proportion of each element of the ‘PIE’ varies according to the type of policy of which there are many different forms.