DIFFERENCE BETWEEN ASSURANCE & INSURANCE
.difference between assurance & insurance is given below
What is assurance?
It is a financial agreement between two parties a policy provider and policyholder for reimbursement, for a certain incident that will surely occur. Where duration remains undefined but the event will definitely occur. While buying a policy the policyholder has to pay a defined amount of money in a certain period of time. That amount with certain increment will be returned to the policyholder or his next of kin after that event has occurred. The best example of assurance can be life insurance. In life assurance, one pays a premium and on his death, a defined amount is given to his family. Here event is death and the assurance payable amount will only be paid when demise is confirmed. However, it may be paid on maturity basis i-e after a defined period of time with complete payment of premium. There are three types of life insurance.
Whole life assurance:
Whole life assurance takes the death of the insured as an event of payment. Next of kin policyholder can get the amount after his demise.
Term life assurance:
In this type of assurance certain time duration is defined. After full premium is paid and the duration is completed the lump sum is paid. This is also called the payment on the maturity of the policy.
It is much similar to term life assurance in term of premium payment while assured sum is paid in installments rather than in lump sum.
What is insurance?
Insurance is business of taking care of risks of someone that uncertain to happen. It can also be defined as a contract between the insurer and insured where the insurer will have to pay the defined financial loss in case of an accident or natural disaster in exchange of premium which insured pays. In other words, we can say that the insurance company for a defined amount of money promises to provide financial assistance in case of any damage or loss. This all goes with under certain rules and condition written on a paper called an insurance policy. This document covers types of loses company will indemnify and in what circumstances along with indicating the amount of insurance the company will pay insured.
More exact to say insurance is a risk management system. It promises to compensate loss or damage caused by some accident of natural disaster. There are two major types of insurance
Life insurance covers risks pertaining to a person. Life insurance premium is paid within given time duration and insured gets the full defined sum of money either on the maturity of the policy or the insured’s family is paid after insured’s demise. In case of demise, the total sum is paid in a lump sum while in maturity it is given in installments.
The Non-life or General Insurance:
There are several insurances other than life insurance, all fall into the category of non-life or general insurance. This insurance includes
- Home insurance
- Health care insurance
- Car insurance
- Marine insurance
- Property and casualty insurance
In such insurances, the total loss is paid by the insurance company.
Difference between Assurance & insurance
1: Insurance promises to cover the financial losses for the even that is not certain to happen means that event may occur or may not occur like;
- The Flood insurance
- Car insurance
- The Fire insurance
- The Theft insurance
- The Natural disaster insurance
While on the other hand Assurance work on the events that are certain to happen, however, that even may occur sooner or later.
2: In an insurance policy, the reimbursement is paid only when that uncertain event occurs. If that event doesn’t occur the company is not to pay.
3: In assurance, the insurable sum of money is paid to next of kin on the demise of the policyholder or when the policy is the matured.
4: Insurance is renewed every year i-e premium is paid after expiry of the first insurance While assurance being long termed agreement remains for years.
5: Insurance promises to stabilize the insured after the financial loss he faces; while on the other hand assurance is not concerned with the position or status of the insured it just pays the insurable amount when an event occurs.
6: In insurance, insured has to pay a premium on regular bases to stay benefited with the services the company pay and for indemnity against risk. This opposite in case of assurance where the insured pays a premium on timely bases and has to pay only until the defined premium am
ount is achieved. In assurance, the policyholder is provided with services even after he is no more paying premium. However the insurable is paid on the even occurrence bases. DIFFERENCE BETWEEN ASSURANCE & INSURANCE In the contract of assurance the sum assured is bound to be paid whether insured suffers a loss or no It is used when risk is certain and is bound to happen assurance, the compensation is paid whether the event happens or not. For example Life Insurance
In the contract of insurance, the insured must suffer a damage or loss, to claim the compensation. It is used when risk is uncertain, it may or may not happen. In insurance, the compensation is paid only on the happening of an event. For example Fire Insurance, Marine Insurance. The term ‘Insurance’ refers to protection against an event that might happen, such as a motor accident, a fire or a burglary. This then means that an insurance policy is taken out to prevent a risk or provide cover against a risk, should such an event take place. DIFFERENCE BETWEEN ASSURANCE & INSURANCE
The term ‘Assurance’ refers to protection against an event that will definitely happen, such as the end of an individual’s life. In assurance the question is not whether the event (death) will occur, but when the event will occur. Life insurance is a contract between the insurance company and the insured, wherein the insurance company commits to pay a certain pre-decided amount, known as Sum Assured, to the nominee, upon the death of the insured (person buying the insurance).
Since the death of this person is certain, a life assurance policy results in payment to the beneficiary when the policyholder dies. A term life insurance policy, however, will cover a set period of time
Difference between Assurance & insurance
While ensuring a life, the word ‘Assurance’ is used. The reason being it’s almost impossible to determine the value of a human life. Apart from the financial aspects, a lot of emotions, love, and affections are attached which cannot be quantified. whereas in the case of non-life, we can anyway get the exact value of the item insured. Insurance means we will provide the same thing if it is damaged or lost. Eg. If a car is damaged or lost we can provide another car, this term is for general insurance, but assurance is denoted for life. life cannot be provided if we lost, means we cannot provide human if we lost it. We can give only the compensation or value of assured life.
Difference between Assurance & insurance. he terms insurance and assurance are used frequently in the financial industry. Insurance provides financial coverage for unforeseen circumstances surrounding an event, such as fire, theft, or flooding. Assurance provides coverage for events that will occur, such as death. The specific uses of the terms “insurance” and “assurance” are sometimes confused. In general, in jurisdictions where both terms are used, “insurance” refers to providing coverage for an event that might happen (fire, theft, flood, etc.), while “assurance” is the provision of coverage for an event that is certain to happen. In the United States, both forms of coverage are called “insurance” for reasons of simplicity in companies selling both products. By some definitions, “insurance” is any coverage that determines benefits based on actual losses whereas “assurance” is coverage with predetermined benefits irrespective of the losses incurred.