Difference Between Insurance and Assurance 

The terms insurance and assurance are related to financial planning and policies people take to protect various aspects of their lives.  It is a contract between the insured person and the insurers. These policies can cover insurance and assurance.  Insurance covers the individual for specific incidents and accidents that could happen while assurance is a policy covering an event that will definitely happen.  Insurance is a form of protection while assurance gives peace of mind financially and emotionally in the event of personal mishaps or the death of the policy holder.

What is Insurance ?

Insurance is a contract.  An insurance company will agree to cover certain aspects of the insured person’s life style that would need protection.  It is usually the expensive purchases like homes and motor vehicles that are covered by an insurance policy.  The insurer pays an agreed sum of money for the duration of the policy and the items insured are listed under the policy.  The renewal period is determined by the policy.  Generally speaking it is renewed every year on the date of commencement.  The annual subscription is increased marginally and the contents of the policy renewed.  Some of the items insured may need evaluations and these evaluations will be reviewed from time to time. The company offering the policy will insure that all the risks covered are checked and safety measures and security devices are in place to lower the risk of loss or damage.

Types of Insurance:

Insurance can cover a large number of different things.

• House insurance is an important policy as buying a house is a very expensive commitment and often the bank is holding the documents until loans and mortgages are paid up.  The policy is a safeguard for the bank and the insured individual.
•  Cars are insured while they are being purchased and also in the event of an accident an insurance policy will help with damages.
• The contents of a house are often insured against theft or damage so the insurer can make a claim for any items stolen or damaged in a storm or other natural disasters.

• Anything of value to you and your family inside and outside the house like sports equipment, photographic equipment and technological goods.
• People have health insurance and some of the rich and famous insure different aspects of their bodies that have attributed to their success in life.
• Antiques and valuables are insured as well as paintings and items of historical value.

What is Assurance ?

Assurance is a form of life insurance and is based on a particular event or moment in time.  It is a policy that will always be paid because it is attributed to an actual date agreed on within the policy.  It is an investment and the value of the policy increases as investment bonuses are added.  The policy can be cancelled or cashed in at any time although penalties may be imposed for doing so.  Assurance gives the policy holder confidence of some remuneration should the event that is stipulated occur.

Types of assurance:

Assurance is a form of life insurance and can be grouped into different types.

• Whole Life: this assurance policy covers the life of the insured, it matures on their death.  The insurer’s death is the event that determines the duration of the policy.
• Term Life: a lump sum is paid out at a term decided upon on the life of the insured during their life time.
• Annuity: a sum is agreed on and the amount is dispersed in instalments at the time that it matures.
• Trusts: are created so the benefits go directly to the beneficiaries and not into the estate as a whole when the insured person dies.
• Endowment: a policy that matures as a tax free profit.

Insurance and assurance are both financial products and part of organisations that draw up the policies and determine the contributions made to secure the policies as well as the amounts paid out on the claims that are made.  Life insurance is considered to be an assurance policy while all other insurances are categorised under the term ‘general insurance.  General insurance covers protection against loss or damage to anything and everything from house and home to body parts, voices and many more bizarre items.

There have been insurances set up against game shows like who wants to be a millionaire.  The show is insured in case someone does win a million. Keith Richards, guitarist for the Rolling Stones insured his middle finger from loss or injury for a mere 5 million dollars and Bruce Springsteen has his voice insured for 6 million dollars. Insurance is about having peace of mind about valuable things and whatever is valuable to you can be insured.

Assurance has a broader meaning as it is connected to the knowledge that something is going to occur.  That event can be insured but the assurance is linked to the fact that something is going to take place.  Assurance helps people feel confident and secure in the knowledge of a commitment to them or to others. In religious circles ‘Blessed assurance’ is spoken of as the knowledge that something spiritual and divine is guaranteed to believers.  It is the assurance of spiritual guidance and unconditional love.  Well known hymns sing of ‘blessed assurance – perfect submission, perfect delight’ a promise of something that will happen and is absolutely true.  Assurance inspires confidence and affirms commitment.  Assurance is connected to motivation and inspires us to progress and try new adventures in life. Friends and family offer assurance as we grow up and education and training offer assurances of ability to perform in chosen careers.

Gertrude Himmelfarb, a dedicated historian said: “Nothing is as seductive as the assurance of success.”

While assurance is an investment in peace of mind and gives a return for the money invested, insurance is a means of protection and the return is only seen if the insurer needs to claim for the protection offered.  Property insurance dates back to the Great Fire of London in 1666 and the idea of protecting property and other valuables has grown into multimillion businesses.  Insurance in the United States is rated as the biggest business organisation in the world.  Over the past four years companies have exceed more than 1.2 trillion dollars in revenue.  Everyone needs insurance of some kind for their property and their lives.

Medical insurance is probably one of the most sought after insurances as families need the assurance that their health is insured against any accident or unwelcomed disease.  Hospitals and doctors require guarantees of hospital insurance in order to perform medical procedures and to cover any time spent in hospital.  The degree of the insurance will depend on the age of the beneficiary and their health.  Keeping fit and taking care of your general health is an important aspect of assuring your well- being.

‘Taking care of your body is insurance for your soul’ wrote Toni Sorenson.

The final conclusion in comparing these two words is that although they go hand in hand in insurance terms they are different in the types of services they provide.  A comparative chart puts these two words into perspective and outlines their simple differences whilst they are still basically part of the world of insurance policies and financial services.

Difference between Insurance and assurance: Comparison Chart

The tables outlining the basic principles of assurance and insurance make it clear that although the two principles are linked through the financial business they are part of they are in fact different principles with different benefits awarded to the persons contributing to their funding.  Insurance and personal assurances are an integral part of modern daily living.  They insure financial expenses of an unforeseen accident or mishap are covered and that in the event of an accident there is a recovery plan in place.  The uninsured person could in fact face financial ruin without the assurance of insurance to cover all risks registered on a general insurance policy.

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