In the case of Insurance and Assurance both are covering insurance, Both work in different areas. Insurance is between insurance companies and individuals, it is a type of general insurance, On the contrary, Assurance is for the long term, and it is a type of life insurance, this is the basic difference between them.
What is Insurance?
The two parties to the agreement that governs insurance are the insurance company and the injured party. The organization that offers insurance is known as the insurer. The term "insured" refers to the person who is protected by an insurance policy as well as the party who has agreed to pay for specific losses the insured experiences. The legal representation of the insurance contract is an insurance policy that contains all the terms and conditions relating to risk indemnification. Because it is mandated by law in many countries, auto insurance is the most common type of insurance policy. Liability insurance, homeowners insurance, medical insurance, and life insurance are some alternative names for coverage options.
What is Assurance?
Assurance is a word that is frequently used in relation to insurance and life insurance policies. The policyholder is guaranteed that should a specific event occur, they will receive compensation. For example, death or disability. Compared to general insurance policies these policies typically have longer terms of validity.
Difference between Insurance and Assurance
- Insurance is a type of general insurance, while assurance is a type of life insurance.
- The time duration of insurance is only one year, the policy is renewed on the expiry of the term. On the contrary, Assurance is for the long term, which operates over a number of years.
- Insurance is based on the principle of indemnity, While assurance is a bit different, which relies on the principle of certainty.
- Insurance provides protection against an anticipated event, Conversely assurance tends to provide protection against a definite event.
- Insurance and the reimbursement of the loss or damage will be paid only on the occurrence of the uncertain event. In an assurance, the insured amount is paid either upon the insured's passing or when the policy reaches its full maturity.
- In the case of an insurance policy prevents the specified risk or provides protection against it. Whereas in assurance the policy is taken against a definite event.
- The goal of insurance is to protect the insured against any risk. On the other hand, the main purpose of assurance is to assure payment, for the happening of the specified event.
- Insurance, the insurer promises to put the insured back in the position he or she held prior to the occurrence of the event. In contrast, assurance agrees to pay the amount promised when the event occurs.
- In order to receive risk indemnity under an insurance policy, it is the insured responsibility to pay premiums at regular intervals, As opposed to assurance, where the insured agrees to make timely premium payments in exchange for the benefit upon the occurrence of the covered event.