Valuable things need protection from natural calamities, incidents, and accidental damages. The protection is provided by financial institutes like insurance companies to either reinstate the damage or to pay for the cause. Insurance and assurance are the products used to get insured on valuable things. However, the products are used to ensure different things and the period of insurance is also differs.
Insurance vs Assurance
The main difference between Insurance and Assurance is that Insurance is a product used to get insured on the property, body parts, and other assets, while Assurance is a product used to get insured on the whole life. Insurance is claimed only when a certain incident described in the agreement occurred, while assurance is claimed after the certain defined period or death of an insured person.
The insurance policy company defines the incidents upon which occur the company will pay a sum of money to the insured person to restore the loss. Insurance can be taken on vehicles, homes, property, and other body parts. Insurance is renewed every year to protect the assets against the risks that could happen in the future.
Assurance is also a product on an insurance policy used to value the life of a person. The insurer will assure to pay a sum of money to the insured person after a certain period. The period can be the whole life of a person. An assurance policy is a policy made on the incidents that will happen for sure in the future.
Comparison Table Between Insurance and Assurance
| Parameters of Comparison | Insurance | Assurance |
| Policy Type | It is general insurance made on people and property to overcome losses during uncertain situations. | It is life insurance made on people only paid after death. |
| Term | Insurance is done for a year which can be reviewed later. | Insurance is done for the whole life of a person or a certain decided period. |
| Risk covered | Natural calamities, vehicle damage, repairs, diseases, and other unpredictable risks | Predictable risks like death. |
| Amount claimed | The claimed amount is the total loss incurred. | The claimed amount is the pre-defined amount plus profits. |
| Number of Claims | The insurance can be claimed many times. | It is claimed only once. |
What is Insurance?
Insurance is a preparation to face uncertain risks confidently. Today, everything is insured, from mobile phones to living. Insurance provides financial support when an uncertain event occurs. Some uncertain events are natural disasters, damage to properties, life, and other valuable assets. Insurance companies help people financially by offering various types of insurance such as car insurance, vehicle insurance, home insurance, property insurance, mobile insurance, and health insurance.
Each insurance policy has different terms and conditions upon which occurring the insurance is claimable. In the case of health insurance, the company will provide support in treating defined diseases and only in defined hospitals. It does not bear complete treatment expenses but provides financial support.
Insurance works on the principle of indemnity, where the insurance company only pays for the loss that occurred within the defined tenure. When the period of insurance is finished, no incident occurred, then the insured person can either renew or claim the insured sum without any profit.
The insurance amount depends on the current market asset value the loss paid as per the market value. The insurance company only supports the insured person to overcome the loss, whether small or big. The insurance on valuable things does not provide confidence to the insured person to full support.
What is Assurance?
Assurance is the other product of insurance companies as its name assures to provide financial support when an incident occurs. The incident in the assurance policy is an incident that occurs in the future, such as death. Assurance policy is a life insurance and assurance persons to get benefits and sum of amount, along with profits after the death.
Assurance works on the principle of certainty the company will pay the sum of insured money and profits to the insured person or the nominees. The assurance has tenures such as it can be a long-term commitment or a certain period. A premium amount is paid by the insured person to get the benefits at the time of event occurrence.
Assurance comes in different types like life insurance, term insurance, and annuity. The policy is insured only gained one incident, and that is death. The death may be due to disease or accident. The amount received by the insured person is decided at the time of insurance commencement. It is claimed only once in the tenure and that too at the end of tenure. The insurer will reinvest the amount to earn profits for the insured person. The insurer will assure to give the sum of amount and reduces the stress of the insured person.
Main Differences Between Insurance and Assurance
- Insurance is insured against unexpected events, while Assurance is insured against definite events.
- The insurance amount is equal to the loss or current value of the asset, whereas the Assurance amount is the predefined amount, including the benefits.
- Insurance can be done on any valuable asset like vehicles, gadgets, property, and health, whereas an assurance policy is only for life.
- Insurance tenure is only for a year and can be renewed, whereas an assurance policy tenure is for the whole life of a person and cannot be renewed.
- Insurance policy only provides some financial support, whereas Assurance gives peace of mind to the insured person.
Conclusion
Having insurance on valuable assets is very important these days. Anything happens anytime. Insurance is the way to be prepared for unexpected situations. However, it is important to understand the terms and conditions of each policy before availing it. Assurance for life is a no loss, beneficial policy as it provides benefits and the total sum of predefined money to the insured person or his nominee.
General insurance is also a policy for the assets that provide financial support during an emergency. Insurance only gives the current value of the asset or the amount of loss that occurred to the insured asset. Assurance gives invested amount plus returns to the insured person. Both insurance policies are necessary to be with peace of mind.
References
- https://udrc.lkouniv.ac.in/Content/DepartmentContent/SM_dd12ab8b-9b63-45c1-8136-986005143e57_30.pdf
- http://eprints.lse.ac.uk/60764/