What is the difference between insurance and assurance?

The mantra to live a healthy life these days is to be independent. When you are independent, you do not have to explain anything to anyone and can live your life on your own terms. This also applies to a situation when you are not well and might even have to be hospitalized. We all know about the steeping medical bills these days. You should have the kind of money in your account so that you can pay the bills and get the best treatment to get rid of your ailment.

Well, having that kind of fund is not always possible, especially for an individual who already has so many responsibilities to take care of. This is where a health insurance policy plays a vital role. Once you have a health insurance policy, you do not need to be bothered about the high medical bills. The bills will be settled by your insurance provider with the hospital.

When we talk about insurance, we often come across the words like insurance and assurance. Well, these might be two common terms in the insurance industry but you need to be aware of their meaning before you start paying premiums for the policy you buy. So, let us today discuss the difference between insurance and assurance here.

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What is Insurance?

Insurance can be defined as an arrangement in which the insurance company commits to the policyholder to cover the damage that has been caused during a happening that is not certain. They provide this compensation in exchange for a predetermined premium amount which the policyholder has to pay consistently. If the coverage is more, the premium will also be higher. To put it in other words, insurance is nothing but a risk cover tool. There are several types of insurance, such as health insurance, motor vehicle insurance, life insurance, etc.

What is Assurance?

Assurance is similar to insurance and both of these offer financial coverage to the policyholders. However, in assurance, a predetermined amount of money is promised to be reimbursed in an unavoidable event such as death or when the policy tenure is over. This kind of coverage is provided in life insurance. Life insurances are further divided into three types, including Term Life Insurance, Whole Life Insurance, and Annuity.

Read More: New India Assurance Health Insurance

What is the Difference Between Insurance and Assurance?

Insurance and assurance both sound similar and also provide financial coverage to the policyholders. However, there are a few other things that make them different from each other. Let us talk about them here.

1. Meaning of Insurance and Assurance

Insurance comes with compensation for uncertainties like medical emergencies or natural calamities. An assurance on the other hand provides financial coverage for an unavoidable event which can be the completion of the policy tenure or death.

2. Insurance and Assurance : Objective

When you have an insurance policy, you will have financial stability amidst uncertainties. Assurance will provide a predetermined amount of money as an event takes place.

3. Principles of Insurance and Assurance 

Insurance follows the principle of indemnity, while assurance follows the principle of certainty.

4. Insurance Types

Insurance products come for general insurance which includes health, motor, fire, and liability insurance. Financial coverage based on the idea of assurance is offered by all life insurance products with the exception of term life insurance.

5. Claim Settlement 

Only once an uncertain event takes place, does insurance provide financial coverage. Assurance is clearing payment when the policy matures after an event occurs. In both cases, the policyholder has to inform the insurance company about the happening and accordingly raise the claim.

6. Policy Duration of Insurance and Assurance 

Insurance policies that you will come across are mostly short-term, while assurance-based whole life insurance plans are long-term.

Why Being Insured is so Important?

Life, as well as the General insurance policies, come as great help in certain situations. The financial support provided by insurance is actually very helpful, especially in an unfortunate event.

Let us take the example of health insurance. The expenses related to the treatment of an illness depend on the severity of the ailment. If you are not covered under a health insurance policy, having a financial backup can be a problem. Timely and the right treatment is very important, especially if it is a critical illness. This is where health insurance will help you in every step. If you have bought a critical illness cover along with a regular health insurance plan, it will even help you more with your treatment for a critical illness. All that you need to find is the network hospital nearby and get hospitalized if need be. You can then inform the insurance company accordingly and claim the coverage. Therefore, we can say that being insured is very important.

You can find insurance plans these days online and compare them from the comfort of your home. You can first go through all the necessary information and then make an informed decision.

Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.

 

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