Assurance

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DEFINITION of 'Assurance'

Coverage of an event that is certain to happen. Assurance is similar to insurance (and sometimes the terms are interchangeable) except that insurance protects policyholders from events that might happen.

INVESTOPEDIA EXPLAINS 'Assurance'

For example, a person can choose to purchase life assurance or term life insurance. (Note in the U.K. "life assurance" is another term for "life insurance".) The event in question is the death of the person the policy covers. Since the death of this person is certain, a life assurance policy results in payment to the beneficiary when the policyholder dies. A term life insurance policy, however, will cover a set period of time, such as 30 years, from the time the policy was bought. If the policyholder dies during that time, the beneficiary receives money, but if the policyholder dies after the 30 years, no money is received. The assurance policy covers an event that will happen no matter what, while the insurance policy covers a event that might happen (the policyholder might die within the next 30 years).

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RELATED FAQS
  1. What are examples of the largest companies in the insurance sector?

    In the United States, the two largest life insurance companies, in terms of assets as of 2015, are Metlife and Prudential ... Read Full Answer >>
  2. What is the difference between term and universal life insurance?

    Term life insurance is the most basic of insurance policies. It is nothing more than an insurance policy that provides protection ... Read Full Answer >>
  3. What financial ratios are most useful for an investor to evaluate the liquidity of ...

    An insurance company, like any other nonfinancial company, needs access to liquidity in case it needs to fulfill its debt ... Read Full Answer >>
  4. What economic indicators are important to monitor when investing in the insurance ...

    Inflation and interest rates are the best economic indicators to monitor when investing in the insurance sector. Unlike with ... Read Full Answer >>
  5. Why do some companies in the insurance sector engage in reinsurance?

    Some companies in the insurance sector engage in reinsurance because they want to reduce risk. Reinsurance is basically insurance ... Read Full Answer >>
  6. Why is the insurance sector considered a low-risk investment?

    Historically, the insurance sector has enjoyed modest returns and perceived safety. It's been a favorite for investors who ... Read Full Answer >>
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