You may have come across the terms Insurance and Assurance many times. Though they may sound similar but they are completely different when you try to understand the concept behind them. We will have a look at what insurance and assurance is and the key differences between them.
What is insurance?
Insurance is nothing but a contract between the insurer and the customer. The customer can buy insurance to protect his property or get coverage in case of any damage or loss of property. For example, if you have a two-wheeler vehicle, you can purchase a motor insurance where in case of any loss or damage to your bike, the insurer will compensate you for the loss. In case your vehicle is involved in causing damage to the property of a third-party, the insurance company will compensate the victim.
What is assurance?
Assurance is a type of insurance policy where not only will you get compensated in case of any loss of your property but you may also receive a certain lump-sum amount once your policy matures. For example, if you buy an endowment insurance policy, where in case of your death, the nominee will receive a claim amount. However, if you survive the maturity period, the insurance company will pay you a lump-sum amount which you can use to take care of your future financial requirements.
Differences between insurance and assuranceInsurance Assurance Who is insured The property in question such as vehicle, building, etc. The policyholder Type of insurance policy General insurance plans like motor insurance Term insurance, ULIP, etc. What is provided coverage Vehicle insurance, health insurance, home insurance Life, death cover, and disability Objective behind availing the policy Provide compensation in case of damage or loss of specific property Compensation in case the policyholder meets with an accident, gets injured, or expires Number of claims you are allowed to make Multiple One Renewability Annually NA Payment of claim Amount is equal to the cost of damage incurred The amount payable is predecided.
|Who is insured||The property in question such as vehicle, building, etc.||The policyholder|
|Type of insurance policy||General insurance plans like motor insurance||Term insurance, ULIP, etc.|
|What is provided coverage||Vehicle insurance, health insurance, home insurance||Life, death cover, and disability|
|Objective behind availing the policy||Provide compensation in case of damage or loss of specific property||Compensation in case the policyholder meets with an accident, gets injured, or expires|
|Number of claims you are allowed to make||Multiple||One|
|Payment of claim||Amount is equal to the cost of damage incurred||The amount payable is predecided.|
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.