What is the difference between Insurance and assurance ?

The two term ‘insurance’ and ‘assurance’ are often loosely used to mean one and the same thing. But the terms are not synonymous. Assurance refers to a contract under which the sum assured is bound to be payable sooner or later. A contract of insurance is a contract for compensation for damage or loss as in case of fire and marine insurance. The term insurance is used where the risk is uncertain – it may not happen.

The following are the points of distinction between life and other forms of insurance.

(1) In life assurance, the event is bound to happen; the only uncertainty being the actual time of its occurrence. But in case of other forms of assurance, e.g. fire, marine or accident, it is not certain that the event insured against may happen at all.

(2) The contract of fire, marine and accident insurance is a contract of indemnity, but a contract of life assurance is not a contract of indemnity. In the former case, the amount recoverable is measured by the extent of the assureds’ pecuniary loss, while in the case of latter the sum assured is payable irrespective of any proof of loss and to the full extent of the amount insured.

(3) The insurable interest in case of fire and marine insurance is capable of measurement in terms of money. In case of life insurance, this is not possible.

Don't forget about Mom! She needs life insurance, too! -

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(4) Life insurance contracts are long term and continuing contracts. Marine, fire and other forms of insurance are generally entered into for one year, though renewable, provided, the insured is willing to do so and pays the premium.

(5) In life insurance, the insurable interest must exist at the time the contract of insurance is entered into. In fire insurance, there must be insurable interest both at the time of insurance, and at the time of loss. In marine insurance, the insurable interest must exist at the time of the loss.

(6) In life insurance the subject-matter of insurance is human life, whereas in other forms of insurance, the subject-matter insured is normally properly.


(7) Life insurance contains both the elements of protection and investment, whereas, in case of fire or marine insurance, only the protection element exists.

(8) A life policy can be surrendered by the assured before its maturity. In case of fire, or marine policy the insured cannot do so.

(9) There is no question of over or under insurance in case of life insurance, whereas in other forms of insurance the claim is dependent upon the loss suffered by the assured.

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