Banking-Banking is an institute that provides service to its customers related to loans, cash credit, payment by cheque, deposit, and withdrawal of money.
Insurance-Insurance is a contract between two people where the insurance company promises its customers to take the risk of the losses to their customers. The main advantage of an insurance company is that one can have their business security, loss of goods security, and health security.
Banking and Insurance have some similar work or operation based on money. While banks are the institutions which provide funds, loans, and other services related to money transaction to their customers. As insurance is a life savior for death, accident, loss or natural disaster.
Banking and Insurance are different from each other. One side banks provide funds for business, on the other hand, insurance gives money for the loss of business.
Kinds of insurance:
- Life Insurance- A person needs to give premium, a particular amount to the life insurance company which will be refunded to the person after the death or after the completion of the policy whichever is earlier.
- Fire Insurance– This will compensate loss against fire. A premium of the lump-sum amount is to be paid to the fire insurance company for things to be insured like shop, vehicles, goods, etc.
- Health Insurance– this is a contract between an insured person and an insurance company under which insurance company will provide security against sudden death or accident of an insured.
There is a key difference between banking and Insurance. Banks provide short-term or long-term loans to their customers. Basically, in the insurance company, their customers get their insured amount when an accident or sudden death took place.
They both are financial institute. They both have different models and different risks. Banking manages your money and lends funds to you but insurance company charges a premium for your security.
Banking and insurance play an important role in today’s era. They perform various functions towards their customers to provide them the best facility at the best time and are very helpful for the poor or needy people. They secure a leading position in the modern era.