Difference Between Insurance and Assurance
When it comes to financial products and services, one cannot help but meet the terms Insurance and Assurance. Though they may sound the same, the two words are sued differently in the financial world because of their implications. Most companies are comfortable with the word “Assurance” versus “Insurance”, but no matter the term used, both are financial products designed to protect and safeguards the interests if an object or person. To assist a financial novice in telling which one is Insurance and which is Assurance; here is a breakdown of their differences:
Insurance is defined as the “guaranteeing protection of an object or a person, or a guarantee against loss or damage” Individuals or groups obtaining an Insurance get to pay monthly or yearly premiums to the insurance company so as to have the company pay for the loss, damage or death of the insured person or property. There are several types of insurance available in the market such as life insurance, health insurance, home insurance, Auto Insurance, and the like. Insurance has even evolved further as to insure almost anything under the sun such as face, butt, breasts, legs, dentures, pets, and voice.
Aside from the object of Insurance, insurance policies may also vary, like policies that cover a certain period of time in which, if the insured person dies, then the beneficiaries will receive the amount proposed, if he does not; then they receive nothing. Or, a person may acquire the insurance policy for a limited period of time where they will receive the proposed amount with an additional bonus at the end of the proposed term. In most cases, the designated beneficiaries will receive the proposed amount in the Insurance policy upon the death of the Insurance policy’s owner.
Assurance is defined as “making someone feel comfortable with a decision and clearing his doubts” When an individual or company acquires and Assurance policy, the policy will cover him for his whole life regardless of how he transpires. Every payment he makes will add value to his existing assurance policy and when this value adds up to equal the person’s proposed death value, one can say that the said policy has “matured” In a life assurance, the person who acquired the policy may cash out the matured policy anytime he wants. With this, one can construe that one of the major differences between Insurance and assurance is the cash out of the financial product. Unlike Insurance policies whose beneficiaries can usually cash out upon the death of the policy owner, Assurance policies allow the owner to cash out their money upon “maturity”, thus allowing them to enjoy their monetary benefits while still alive.