What Is The Distinction Between Insurance coverage & Assurance
Insurance & assurance both are popular terms in the financial market. People are a bit confused about these two terms. Even sometimes, they subconsciously use both terms for the same meaning. But, there is a thin line between them. They are different with some differences. When you fix your mind to buy an insurance or assurance plan, you need to know the explained details about both terms. In this article, you will get to know about the key differences between Insurance & Assurance.
Top 5 Differences between Insurance & Assurance
Insurance is a mutual agreement, and it covers the loss of uncertain things including, fire, damage due to natural calamities, man-made damages, etc. In a word, Insurance is a policy based on uncertainty. For example, if you purchase term insurance, the insurance will agree to provide a fixed amount to your family after your death.
But it has period limitations. So, if you survive within the fixed policy period, your contract will void. The insurance company is no longer available to keep its promises. On the other hand, assurance is the agreement of financial support for after-death events. The insurance product that comes with the investment component is assurance.
Insurance helps to maintain the financial position. It also helps to achieve financial stability. On the other hand, assurance only pays the assured sum during the event.
There are different types of insurance. These are Plumbers Insurance, motor insurance, fire Insurance, Janitorial Cleaning Services Insurance, etc. Examples of assurance are life insurance, endowment plans, etc.
- Claim Payment
Insurance will pay your claimed payment for uncertain things or happenings. Assurance will pay a fixed amount on an insured event or when the policy will mature.
Insurance always promises to cover unforeseen situations. If any risky things don’t happen within the particular period, the insurance won’t pay anything. Assurance covers definite or certain events.
Benefits of Insurance
Insurance is the way of facing unexpected incidents. Insurance helps you to feel the peace of not thinking about the future. Insurance makes a good habit for you. As you need to pay a monthly premium from your income, this routine will bring a change in your habit. As a result, after paying the fullpremium, you will also be able to save your money. Insurance does not only cover the unexpected loss but also try to protect you from any legal action. If any third party faces any accidental damages during your working period, they can take any steps. In that case, it will help you.
Many people get confused about the two terms of insurance and assurance. They both pay for their clients. But, it depends on the possibilities of incidents. Insurance works for uncertainty and assurance work for certainty. That’s the key difference.