What Are the Differences Between Insurance and Assurance?

The sum assured of an assurance policy, like whole life insurance or endowment plans, is a guaranteed amount paid to your beneficiaries if you pass away or when the policy term ends. It ensures financial support for your loved ones no matter what.

The sum insured of an insurance policy is the maximum amount you can claim for a loss, such as damage to your car or home. It depends on the actual cost of the damage. Assurance provides a fixed payout for specific events, while insurance compensates for specific losses up to a set limit.

Choosing short-term renewable insurance policies, like health or auto insurance, offers flexibility to update or change coverage annually. However, premiums can vary each year based on factors like age, health, and claims history.

Long-term assurance policies, like life insurance, provide coverage for a longer period or for life, with fixed premiums. This gives stability and peace of mind, but often at a higher initial cost. In short, insurance offers flexibility, while assurance offers stability and guaranteed coverage.

In insurance policies, the policyholder directly raises a claim with the insurer when covered events like accidents or property damage occur. The insurer evaluates the claim, verifies the details, and then provides financial compensation as per the policy terms.

In assurance policies, such as life insurance, the nominated beneficiary raises the claim upon the insured person's death or other qualifying events like terminal or critical illness if covered. The beneficiary submits the required documents to the insurer, who then verifies the claim and disburses the predetermined sum assured to the beneficiary.

Insurance policy beneficiaries typically need to file a claim with the insurer after an event like an accident or damage occurs. The insurer reviews the claim and compensates the beneficiary for the financial loss incurred due to the covered event.

In contrast, beneficiaries of assurance policies, such as life insurance, receive a predetermined sum assured upon the insured person's death. They notify the insurer of the death, provide necessary documentation like a death certificate, and receive the guaranteed payout upon verification.