A loading of 5 years on John's life assurance policy indicates:

A loading of five years on John's life assurance policy refers to the adjustment made to the premium based on his age as it relates to risk. Specifically, it means that the underwriters of the insurance company are pricing his policy as if he were five years older than he actually is. This adjustment generally reflects the notion that an older individual may have a higher mortality risk, thereby causing the insurer to calculate higher premiums due to the perceived increased risk associated with insuring someone who is older.

This principle ensures that the premiums John pays accurately reflect the risk profile associated with his age. By costing the cover as if he were five years older, the insurance company can better manage its risk and financial exposure while also ensuring that all policyholders are charged fairly according to their respective risk levels.

The other options do not align with the specific concept of loading in life assurance policies. The idea of lower premiums or increased coverage is not relevant in this context, as loading specifically deals with the adjustment of cost based on age-related risk rather than offering any additional benefits or reductions.