Insurance vs Assurance — Let’s have a brief difference

Insurance and assurance are two types of common products which are widely sold in the market these days. But both insurance and assurance are two completely different products offering more or less the same thing which is confusing and misunderstood.

Here in this article, we will discuss insurance vs assurance which will help you to learn the key differences between both and how these two are separated from each other.

Insurance vs assurance

Definition

Insurance can be defined as the financial arrangement in which the insurance company commits or enters into an agreement to indemnify the loss of an insured person due to any kind of natural calamity or any personal mishappening that happens to the insured person.

In that case, the insurance amount might be small, or some percentage of this loss caused to the insured, or else it can also be a lump sum amount of money for which the insured has subscribed for.

On the other hand, assurance can be defined as an agreement between the insurance company and the insured person that the company will provide cover for an event that may likely happen sooner or later in the life of the person getting insured.

Objective

Insurance provides financial stability in case of any uncertainties where an assurance pays out predetermined money when an event takes place.

Allowable Number of Claims

One major difference between insurance and assurance is that all policyholders associated with insurance can file several claims, whereas those with assurance can only file one.

Different Types of Policies

Insurance generally includes things like car insurance, health insurance, and mobile phone insurance, among other things while Assurance involves life insurance, term insurance, endowment plans, ULIPs, and other financial products.

Principle

The primary principle of Insurance is the principle of indemnity on the other hand assurance is based on the principle of certainty.

Policy Duration

Insurance policies are usually for short-term whole life while the policies primarily based on assurance are usually long term.

The Nature of Risks

Another primary difference between insurance and assurance is that theft, burglary, catastrophes, fire, accidents, and other unknown risks are generally covered by insurance, while assurance only covers death.

Conditions

Insurance plans have several conditions on which the company decides what kinds of loss or damages are covered within that policy. Along with that, the amount is definitely payable.

On the other hand, an assurance general comes with specific plans or paths to save and protect a definite benefit at maturity. Thus they are usually life insurance plans, for example, whole life insurance, endowment plans, and to a specific degree term insurance.

Claim payment

The claim payment is approximately equal to the amount of loss in the case of insurance. For example, the cost of repair and replacement of vehicle parts, hospitalization bills, etc. are generally covered by insurance.

Whereas Pre-decided amounts are generally covered for a specific event in case of assurance. For example, a major illness such as cancer, the death of the policyholder, etc.

Conclusion

Although insurance and assurance are two similar things as they both provide financial compensation, both of them are quite different from each other in their scope and usage.

So it is very important for you to know, understand, and be well acquainted with all these terms if you want to purchase insurance.

Understanding the meaning and significant difference between insurance and assurance can surely assist you in better way to comprehend the insurance plan’s benefits.