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. This insurance vs assurance article 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 :
- Insurance can be defined as an arrangement in which the insurer commits or enters into an agreement to indemnify the insured’s loss 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 caused to the insured, or it can also be a lump sum amount of money that 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 that is likely to happen sooner or later in the person’s life getting insured.
- Another key difference between insurance vs assurance is that insurance is subscribed for an uncertain event, and the probability of happening of that event is less or not considered. On the contrary, assurance is an instrument that provides cover to an event whose probability of occurrence is high. It will 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, assurance is to make a fixed payment in happening of a likely event in life.
- The tenure of insurance is generally less when compared to the tenure of assurance because the insurance is not a long-term benefit. In contrast, assurance can provide you with long-term benefits.
- 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 tenure increase 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 are the 6 topmost comparisons between Insurance vs Assurance:
|The objective of insurance is to reinstate the insured’s financial position 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 the bonus.||The premium received by the assurance company is invested in other financial instruments to generate an 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.|
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 customers 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 customer’s financial status and well-being. An individual should consult a financial planner or an insurance advisor to choose the right kind of insurance policy for him and his family who needs to be protected long after he is gone and should remain in a sound financial position.
This has been a guide to the top difference between Insurance vs Assurance. Here we also discuss the Insurance vs Assurance key differences with infographics, and the comparison table. You may also have a look at the following articles to learn more.