What Are the Differences Between Insurance and Assurance?

What Is Insurance?

What Is Assurance?

What Are the Differences Between Insurance and Assurance Policies?

The differences between insurance policies and assurance policies are as follows:

Point of Comparison

Insurance Policies

Assurance Policies

Purpose

To provide financial protection during any unfortunate situation.

To provide financial protection to a nominee after death of the policyholder.

Principle

Based on Principle of Indemnity

Based on Principle of Certainty

Coverage Against

Health, property and vehicles

Life and death of policyholder

Risk Type

Theft or natural calamities

Sudden death

Event Type

Unanticipated event

Definite event

Type

General insurance

Life insurance

Products

Medical insurance, property insurance, and two and four-wheeler insurance

Life insurance, term insurance, and ULIP

Renewability

Every year or on expiry of the policy

Not applicable in this case

Number of Claims Available

More than once

Only once

Claim Amount

Equal to the amount of damage that has occurred

Pre-decided by the insurer and policyholder

Duration

Short-term

Long-term

Number of Insured

One or more

Only one

Person Who Can Raise a Claim

Policyholders can raise a claim

Only nominee can raise a claim

Cost of Premiums

Low

High

Usage of Claim Amount

Only for damage repair or financing treatment

There is no restriction on the usage of the money

Apart from knowing insurance vs assurance, you should also go through the advantages of each while making a decision. There are several advantages of insurance policies that can be beneficial for you.

What Are the Advantages of Insurance Policies?

What Are the Advantages of Assurance Policies?

FAQs About Insurance and Assurance

What are the disadvantages of insurance policies? up-arrow

The disadvantage of insurance policies is that Insurance companies conduct a stringent assessment of the expenditure and only reimburse the amount that they think is sufficient. Also, insurers can either transfer the money to your account or direct it to the account of the partner garage or hospital. This imposes a restriction on the use of the claim amount on the policyholder.

What are the disadvantages of assurance policies? up-arrow

The disadvantage of assurance policies is that the duration of these policies is usually quite long. Furthermore, they are non-renewable and so if you outlive the policy period then you will have to purchase a new policy to extend your coverage. This policy also does not allow you to withdraw the money before the end of the duration of your policy. Besides these, premiums are somewhat expensive compared to insurance policies.

How to select the most appropriate policy? up-arrow

You can take Your current financial status, Future financial goals of your family, into consideration while selecting the right policy for you. Furthermore, you can also consider your current health condition and owning a personal vehicle

Which sections of the Income Tax Act offer exemptions on assurance policies? up-arrow

You can avail tax benefits under the various Sections of the Income Tax Act. These include 80C which offers an exemption of up to ₹ 1.5 Lakhs is available on premiums, Section 10D according to which you will not have to pay any additional taxes on the claim amount. Also, there is Section 80D under which you can opt for deductions under this section if you purchase critical illness cover rider with these policies.