Insurance and assurance are terms that refer to financial planning and policies that people use to protect various aspects of their lives. It is a legal agreement between the insured and the insurers. These policies may include insurance as well as assurance.
Insurance protects the individual against specific incidents and accidents that may occur, whereas assurance is a policy that protects against an event that will undoubtedly occur. Insurance is a type of protection, whereas assurance provides financial and emotional security in the event of a personal mishap or the death of the policyholder.
Insurance:
Insurance is a legal agreement. An insurance company will agree to cover specific aspects of the insured person’s life that require protection. An insurance policy is typically used to cover large purchases such as homes and automobiles. The insurer pays a predetermined sum of money for the duration of the policy, and the items insured are specified in the policy. The policy determines the renewal period. In general, it is renewed every year on the anniversary of its inception.
Assurance:
Assurance is a type of life insurance that is based on a specific event or point in time. It is a policy that will always be paid because it is linked to a specific date specified in the policy. It is an investment, and the policy’s value grows as investment bonuses are added. The policy can be canceled or cashed in at any time, though penalties may apply. Assurance provides the policyholder with the assurance that he or she will be compensated if the specified event occurs.
Difference between Insurance and Assurance
| Insurance | Assurance |
|---|---|
| Meaning | |
| Provides risk coverage for an event that might or might not happen like fire, theft, disease, etc; | Provides risk coverage for events that are certain in nature such as death |
| Coverage provided | |
| Provides coverage against an anticipated event | Provides coverage for a definite event. |
| Claim | |
| The claim is paid on the occurrence of the insured event | The claim is paid either on the maturity or on the occurrence of the insured event |
| Time period | |
| Lasts for a year and needs to be renewed annually. | Runs for the long term after a premium is paid regularly for a certain period |
| Category | |
| General insurance coms under this category | Life insurance comes under the category |
| No. of claims allowed | |
| Multiple claims are allowed | Only one claim is allowed either on the occurrence of the event or maturity. |
| What is insured | |
| Building, health assets are insured depending upon the policy type | Person or policyholder is insured. |
Bottom line:
As a result of the preceding discussion, while insurance and assurance are related, the services provided by each product differ. Understanding the basic difference between insurance and assurance will help you better understand all of the products offered by the insurance and financial services industries. Insurance firms provide both insurance and assurance products. You must purchase the appropriate plan while keeping your needs and objectives in mind.
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