Insured or Assured?

We often come across the terms ‘insurance’ and ‘assurance’ in our daily lives. Most individuals use these words in conversation and find themselves mean different things. These terms have from both literal and figurative differences. Thus when it comes to purchasing one of these policies, it is crucial to know the difference in meaning they hold. A thin line separates these two and brings entirely different schemes onto the table. With this article, you will be able to tell what these terms mean and choose the one that is suitable for you. 

The major reason many get confused between the two “insured” and “assured” is the final result, which is pretty similar.  Both of these policies do financially protect you in cases of unfortunate events, but the way they work is different. For starters, assurance is commonly referred as a life cover whereas insurance is more of a term cover. The key difference between these two is that an insurance claim can only be made during the given term of the policy, whereas an assurance claim will be a definite payout at a certain stage, for example, death. 

An assurance policy always results in a payment of the present investment at the end of the given time period. In addition, any value that has been accumulated with the investment is given as a bonus to the policy holder. Generally, companies provide a long realistic period of time for assurance policies. But when the policy holder dies or the time period ends, the concerned party gets the initial amount plus the accumulated amount from when the contract took effect. If the policy is cancelled before the end of the period, companies may issue penalties for cashing out early and reduce the final amount you get. On the other hand, insurance only covers a given period of time. If the individual goes through a loss during the interval, the insurance provider will give the agreed amount to the policy holder. But when the tenure ends and the individual has not incurred any loss, the insurance provider gets to keep the money and the policy becomes void. Insurance policies cover various events such as theft, damage, death etc. 

To understand whether assurance or insurance better suits your needs, you need to understand the purpose of the policy these provide. Assurance can be seen more like an investment due to its guaranteed payout nature. This provides your beneficiaries with more financial freedom. In contrast, insurance helps you bare the costs of any loss that occur during the given tenure with a up front payment to the insurance providers. Outside the contract period, the policy providers will not contribute financially to your loss unless you renew your contract with a new payment. 

Companies nowadays have recognized that these two words have created confusion amongst many of their clients. To counter this, they have made detailed guides that contain elaborate information available for the general public to see. With information like these, one can finally make the difference between being insured and being assured and purchase the right policy.