INSURANCE VS ASSURANCE
Historically, the word assurance is of much more earlier origin. It was used in Life Assurance while the word Insurance was used for the other types of insurance such as Fire, Burglary and so on. However now the word Insurance is used interchangeably for both Life and other types of Insurance. Following are the distinctions between Insurance and Assurance;
- Certainty of Events: Assurance deals with events which are certain and must occur Such as Death, Old age whereas insurance deals with events which are uncertain and may or may not occur. Such as theft, fire and so on.
- Indemnity: Insurance contracts are controlled by the principle of indemnity such as replacement of actual loss. Whereas in Assurance contracts the doctrine of indemnity does not apply because life cannot be replaced.
- Valuation of Insurable interest: In the case of insurance, the financial interest of the insured in the subject matter (Insurable Interest) must be capable of valuation in terms of money. In the case of life Assurance, This is not possible because life is priceless.
- Time of Insurable interest: In fire insurance, Insurable interest must exist both at the time of making the contract and also at the time of loss. In marine insurance, it must be present at the time of loss. In life assurance it must exist only at time of making the contract but it need not to be present at the time of loss or maturity of the policy.
- Duration of the Contract: Insurance is a contract which is made from time to time such as; monthly, half yearly or yearly depending on the agreement between the parties. A contract of life insurance is made only once and it lasts during a specified period of years or until the assured dies, whichever comes first.
THE MANAGEMENT SYLLABUS
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Winston_Tony Eboyi is a Project Manager who runs programs on Personal Development and matters Business Branding.