12 Oct Blog: Insurance or Assurance? Do you know which cover you need?
Insurance? Assurance? What do these terms mean and what is the difference? When it comes to choosing financial products from insurance companies to safeguard interests of a person or an object, many companies prefer to use the word Insurance as opposed to assurance. People, however, tend to be more interested in knowing the details of the policy rather than the exact terminology; these terms become unimportant to individuals if the cover is right.
The difference in usage of the terms is important and we hope to be able to clarify between the two.
Let’s take insurance to start with.
The actual definition of the word insurance refers to the meaning of indemnifying an object or a person against loss or damage. People obtaining this insurance or protection have to pay the premiums or monthly or yearly to the company which undertakes to pay in the event of loss or damage or death within a term set within the policy. There are various types of insurance products available in the market such as health insurance, life insurance, home insurance, business insurance and many more. In fact, companies have been insuring everything and anything for years, even body parts such as hands, legs, and voices are being insured.
In life insurance alone, these types of polices are there to provide a lump sum benefit to the family of the person insured if they pass away within the term of the policy for example, they may have taken out a policy at the age 32, with a 40 year term, so if they continue to pay the premium and pass away within the 40 year term of the policy it will pay the benefit as a lump.
Now let’s look at Assurance.
Life assurance is also commonly referred to as whole of life cover. Often, there is no set policy term for life assurance A claim can be made whenever the policyholder dies at any stage in their life, meaning the pay-out is almost guaranteed.
So, what are the main differences between Insurance and Assurance?
Insurance policy refers to protection against an event that might happen whereas assurance policy refers to protection against an event that will happen. This means that insurance policy is taken to prevent a risk or provide cover against a risk while assurance policy is taken against an event that is definite.
Assurance policies are undertaken by people knowing that their death is certain. They keep on paying premiums knowing that their heirs will receive an amount of life cover whenever they die. The company issuing the assurance policy is assured of the death of the person and also that it has to pay the amount whenever the person dies. Because of this assurance factor, such a policy is called an assurance policy or whole of life
Hope you enjoyed our short video; we at Best 4 U are happy to provide quotes for both insurance and assurance policies – please email me personally at firstname.lastname@example.org for further info.
Finally, don’t forget to like and share this post – thank you!