Difference Between Insurance vs Assurance
Insurance and assurance are two types of products that are widely sold in the market. But both insurance vs assurance are two different products offering more or less the same thing. In this insurance vs assurance article, we will try and understand the key differences between both and how these two are separated from each other.
Head To Head Comparison Between Insurance vs Assurance (Infographics)
Below is the top 6 difference between Insurance vs Assurance
Key Differences Between Insurance vs Assurance
Both Insurance vs Assurance are popular choices in the market; let us discuss some of the major Difference Between Insurance vs Assurance:
- Insurance can be defined as an arrangement in which the insurer commits or enters into an agreement to indemnify the loss of the insured due to any natural calamity or any personal mishappening which is happening to the insured person. In this case, the insurance amount can be small or some percentage of the loss which is caused to the insured or it can also be a lump sum amount of money which the insured has subscribed for. On the other hand, assurance refers to an agreement between the insurer and the insured that the insurer will provide cover for an event which is likely to happen sooner or later in the life of the person getting insured.
- Another key difference between insurance vs assurance is that insurance is subscribed for an event which is uncertain and the probability of happening of that event is less or not considerable. On the contrary, assurance is an instrument which provides covers to an event whose probability of occurrence is high, and it is going to happen sooner or later in the life of the insured
- Insurance like this comes under the category of general insurance where assurance can be mapped to life insurance. The objective of insurance is to minimize the financial loss of the insurer in happening of an event. On the other hand, the objective of assurance is to make a fixed payment in happening of a likely event in a life
- The tenure of insurance is generally less when compared to the tenure of assurance because the insurance is not a long term benefit whereas assurance can provide you long term benefit
- Under assurance policy will always result in the payment being made because the investment is combined with the sum insured. The value of policy also increases with the increase in the tenure because the investment bonus is being added to the policy. Insurance policies, on the other hand, can tend to be confusing sometimes because the payment which is expected by the insured does not always come as there are some hidden criteria and clauses in the policy which needs to be met before the final payment of insurance is released which does not meet in most of the cases
Insurance vs Assurance Comparison Table
Below is the 6 topmost comparison between Insurance vs Assurance
|The objective of insurance is to reinstate the financial position of the insured to his or her previous position||The objective of assurance is to pay the sum assured when the event takes place|
|Taken to prevent risk or provide against it||Taken against an event, whose occurrence is certain|
|Insurance is based on the principle of indemnity||Assurance is based on the principle of certainty|
|The tenure of insurance is generally less||The tenure of assurance is more|
|The premium amount which is received is not the investment in other investment avenues to generate bonus||The premium received by the assurance company is invested in other financial instruments to generate investment bonus will, in turn, increases the value of the policy|
|Insurance can be car insurance, medical insurance or any other kind of insurance||Assurance is generally related to whole life insurance|
Conclusion – Insurance vs Assurance
Insurance companies offer both the products insurance and assurance which tend to confuse the customer. Many insurance companies offer a wide range of insurance and investment policies and have their own sales agent to induce the customer to buy the policies. One should be careful when he or she is purchasing policies like this which depends on the long term plan and the financial status and well being of the customer.
An individual should take consultation of a financial planner or an insurance advisor in order to choose the right kind of insurance policy for him and his family who needs to protected long after he is gone and should remain in a sound financial position.
This has a been a guide to the top difference between Insurance vs Assurance. Here we also discuss the Insurance vs Assurance key differences with infographics, and comparison table. You may also have a look at the following articles to learn more