Assurance and Insurance are the two similar terms normally used by an insurance company or by a Financial Advisor can confuse you. But, both are different terms. Normally a person is a familiar with the word “Insurance”. Let’s read about what is the difference between assurance and insurance?
Assurance: This is insurance of a person. When a person takes a term plan from his financial advisor means he is taking assurance of his life. It is generally for 30-40 years or can be of lifetime depending upon the option. Insurance of a person is known as assurance. It means that the insured person is transferring his financial risk to the insurance company. The insurance company is liable to pay the Sum Assured in case the event occurred such as death. The insured person will get a lump sum amount on maturity as a survival benefit else, his nominee will get the covered amount i.e. the Sum Assured. It provides coverage of an event, which is certain, like Death. Usually, an average person starts term plan in the age group of 25-30yr as the premium amount is nominal at an early age.
Insurance: An insurance other than Life Insurance comes under the General Insurance category. Like Motor Insurance, Health Insurance, House Insurance, Phone Insurance etc. It provides coverage to an event that may happen like theft, fire etc. In General Insurance, the claim amount is according to the loss occurred.
Insurance as a general term means transferring your risk to the insurance company. Where Insurance Company is liable to pay the Sum Assumed Amount to the person.
Let’s get more clarity with a table about Difference between Assurance and Insurance.
|Meaning||Financial protection from an event that can help anytime.||Coverage of event which is certain, like death.|
|Covers||Health Insurance, Motor Insurance, House Insurance and other general Insurance categories.||Covers Life Insurance.|
|Duration||Renewable every year. It will over if you don’t renew it.||Usually for many years or lifetime. Premium paying term may differ depending upon the policy.|
|Type||General Insurance||Life Insurance|
|Sum Assumed Benefit||Sum Assumed will be given to policyholder i.e. insured. Like in the case of health insurance or motor insurance.||In case of policyholder (insured) survives, Sum Assumed will be given to him.
In case of demise (death) sum assumed will be given to the nominee.
After the Difference between Assurance and Insurance read about basics of Life Insurance, General Insurance and the basic word Insurance.
What is Life Insurance?
In Life Insurance the policyholder (insured) transfers his life risk to the insurance company. He will pay the premium monthly/quarterly/half year/yearly. On survival maturity, he will get the lump sum amount as defined in the policy. In case of demise, the Sum Assured will be given to the nominee. This is basically the protection plan for your family as you have the liability of feeding them. A very nominal amount is charged as premium depending Up to the options you choose. This type of insurance is known as assurance. Where a person plans for his life for a long duration of time. The earlier you start them less premium amount you will get. A 25yr person can get 50Lac cover just at Rs. 12.6 per day.
What is General Insurance?
Any type of insurance other than Life Insurance falls under the category of general insurance. Fire Insurance, Home Insurance, Health Insurance, Phone Insurance and others. The compensation is paid equal to or less than the loss occurred from the Sum Assured Amount.
What is Insurance?
It is a broad term which covers general insurance and life insurance. In simple terms insurance means the transfer of risk from one entity to another. The risk is transferred from the policyholder to the insured. General Insurance can be of limited time but life insurance is of 30-40yr or lifetime.