Are You Insured or Assured under Your Health Insurance?

HEALTH INSURANCE


are you insured or assured under your health insurance

The jargon-heavy language used on insurance documents often confuses laypeople. Hence, most people prefer consulting an agent or middleman to buy insurance, so they don’t have to deal with complicated terminologies. People often fail to comprehend the most common terms, such as being insured and assured while buying insurance.  Although assurance is used synonymously with insurance,  a thin line difference between these two terms makes a significant difference fundamentally. 

Therefore, we have put some light on the difference between Insurance and Assurance and tried to simplify it for you in this article. 

What does Insured Stand for?

Health insurance is based on the indemnity principle in which the insurer agrees to compensate the policyholder for actual hospitalisation expenses in case of an accident, illness etc. The benefits are offered in exchange for a premium paid regularly.  However, the compensation or reimbursement offered by the insurer is usually as same as the amount of loss. Insurance plans come with a specific validity period and a sum insured amount that is compensated up to the validity period. 

If the insured fails to pay the premium on time, the policy lapses and the insured loses all the benefits offered under the insurance plan.

Let’s assume a scenario here…

For instance, Mohan had fallen ill and was rushed to the hospital overnight. The diagnosis showed that he had suffered a heart attack and needed immediate assistance. He had to undergo surgery that cost him 4 Lakh, including his stay at the hospital and doctor’s consultation. As he couldn’t spend out of his pocket, Mohan had cashless health insurance in place with a sum insured of ₹ 5 Lakh. The insurer ensured Mohan didn’t have to spend out of his pocket, and that’s how he got fully covered for his treatment.

The fundamental objective of the sum insured is to rightly compensate and reimburse for the loss suffered and not to give any monetary benefit.

What does Assured Stand for?

Assurance or Assured is usually used with Life Insurance and endowment plans. If you are assured, you will receive compensation in case of certain events like death or disability. Also, if you outlive the policy, a monetary benefit as assured is provided. Assurance policies are usually valid for a longer duration as compared to General Insurance plans.

Let’s assume…

Sohan bought an endowment plan with a sum assured of ₹ 50 Lakh for himself two years ago and has been paying premiums regularly. This plan provides two benefits–if Sohan dies during the policy tenure, the nominee will receive the sum insured amount, and if he survives till maturity, he will receive the lump sum from the insurer as a survival benefit.

The fundamental objective of the sum assured is that you or the nominee always receive whatever is assured no matter whether an eventuality happens or not. 

Insurance Vs. Assurance

Basis Insurance  Assurance
Objective

To compensate for the loss incurred due to sickness or an unforeseen event.

Provides monetary assistance up to the sum assured in case of an event like death or disability.

Fundamental Principle

Based on the indemnity principle, it reimburses the amount of loss or damage.

Pre decided amount is paid in case of death during the tenure or maturity of the policy.

Types

General Insurance products such as accidental insurance, health insurance, car insurance, etc

Life insurance, endowment plans, term insurance, etc

Survival Benefit

You don’t get survival benefit under your health insurance plan.

You get guaranteed survival benefit under your life insurance plan.

Number of Claims Allowed

Multiple number of claims allowed, subject to terms and conditions.

You receive a claim only once.

Duration

Short-term

Long-term

The detailed information above might give you an overview of insurance and assurance. Being insured and assured is equally important as they give you a safety cushion against most of the uncertain circumstances.

Bottom Line

Buying an insurance policy gives you peace of mind as the insurance company assures you to assist you financially during a medical emergency. Whereas under life insurance or term insurance, you receive a good return on the policy's maturity, and in the event of your untimely demise, the nominee gets the sum assured amount. 

Missing out on either of the insurance policies can be disappointing when there is a need for financial backup in times of crisis. If you have bought life insurance but are still confused about Health insurance, this is the high time to invest your time and money in comprehensive health insurance. Care Health Insurance offers a wide range of health care plans that ensure financial protection when you or your loved one need immediate medical assistance. We are the most preferred health insurance provider that delivers care with its cost-effective and innovative health care plans. 

Disclaimer: The abovementioned information is for reference purposes only.



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