Difference between deposit insurance and commercial insurance

What is deposit insurance?

Deposit insurance is a service that protects the interests of depositors. Accordingly, customers' money is guaranteed and compensated in case the bank or credit institution goes bankrupt and cannot pay deposits.

Deposit insurance helps increase the safety and reliability of deposits. As a result, customers feel more secure when depositing money at banks and credit institutions.

What is commercial insurance?

Commercial insurance is a type of insurance created by insurance companies through insurance contracts. The insured is responsible for paying money called insurance premiums to maintain the contract and the insurance company is obliged to compensate when an event occurs as stated in the insurance contract.

Deposit insurance and commercial insurance. (Illustration photo)

Difference between deposit insurance and commercial insurance

In Vietnam, deposit insurance activities are different from commercial insurance.

On the nature of the activity

If deposit insurance operates not for profit, commercial insurance operates for profit.

About insurance mechanism

Normally, credit institutions that accept deposits must participate in deposit insurance according to the mandatory mechanism prescribed by law. Meanwhile, commercial insurance is a voluntary mechanism, according to agreement.

About insurance contract

There is no insurance contract between the deposit insurance organization and the deposit insurance participating organization. In commercial insurance, the insurance organization signs an insurance contract with the organization or individual in need of insurance.

About the insured object

With deposit insurance, the insured object is determined according to the provisions of law. In commercial insurance, the object is determined according to the agreement in the insurance contract.

Fee payer

With deposit insurance, the fee payer is the credit institution receiving the deposit. With commercial insurance, the fee payer is the organization or individual signing the contract with the insurance company.

Beneficiary of insurance money

With deposit insurance, the beneficiary is the depositor. With commercial insurance, the beneficiary is the person designated under the contract.

Insurance content

In deposit insurance, it is mandatory according to the provisions of law, but in commercial insurance, it can be the subject's choice regarding the content of insurance participation.

Lagerstroemia (synthesis)

Source: https://vtc.vn/khac-biet-giua-bao-hiem-tien-gui-va-bao-hiem-thuong-mai-ar837508.html