In the words of justice Tindall, “Insurance is a contract in which a sum of money is paid to the assured as consideration of insurer’s incurring the risk of paying a large sum upon a given contingency.”
There are two types of insurance called as Life Insurance and General Insurance. Again General Insurance has many types of insurance which come under non-life insurance. This article presents you the difference between them.
Life Insurance is an Insurance of a person’s life. So, if the person dies, his/her family would receive an amount of money called as Sum of money Assured, which would help the insured person’s family to take care of the financial problems which had arisen from the sudden death of the income earning person. To get this benefit, he has to pay a certain amount of money called Life Insurance Premium to the Insurance Company every year/every month as per the contract.Life insurance policies pay a lump sum amount to the beneficiaries of the policyholder upon his death or upon the maturity of the policy.
General Insurance is an Insurance which is on the assets.This type of insurance typically covers losses caused by theft or damage Every asset have its own value and it helps the owner by giving him some returns. The benefit may be income or in some other form. So if the asset is damaged due to certain unexpected situations, then owner of the asset faces some financial loss. To protect the owner from a financial loss because of the asset, the insurance policy is done by the owner.
TYPES OF GENERAL INSURANCE
Life insurance and general insurance are completely different kinds of insurance. There are mainly three types of General Insurance Fire, Marine and Motor Insurance, Health Insurance and Travel Insurance.
⦿ Motor Insurance:
Auto insurance protects the policyholder against financial loss in the event of an incident involving a vehicle they own.
⦿ Health Insurance:
Health insurance policies cover the cost of medical treatments.Health insurance policies issued by publicly-funded health programs, such as the cost of medical treatments.
⦿ Fire insurance:
Fire insurance is an insurance that covers property, such as home, commercial shops or other fixed asset or inventory protection against fire damages.
⦿ Marine insurance:
Marine insurance and marine cargo insurance cover the loss or damage of goods which are shipped through the sea way or on inland waterways.regardless of the method of transit.marine cargo insurance compensates the owner of cargo for losses incurred by ship wreck.
⦿ Crop insurance:
Crop insurance is purchased by farmers to protect themselves from various risks associated with growing crops. the risks include crop loss or damage caused by weather, drought, insects, or crop disease.
Now let us see some of the differences between the LIFE INSURANCE and GENERAL INSURANCE
LIFE INSURANCEGENERAL INSURANCELife Insurance brings financial security to the life.General Insurance brings the financial security to the asset. DurationA life insurance plan is a long-term investment.A general insurance plan is typically a one-year contract. But there are exceptions. Premium PaymentA Life insurance premium is usually paid over many consecutive years.General insurance policy plans require you to pay the premium in one-time basis. This usually happens at the start of the policy. SavingsMany life insurance plans also have an element of savings. A General insurance policy has no savings component. MaturityThe life insurance policyholder receives a maturity benefit after the maturity date of the policyEven though the policy holder do not make a claim, he cannot get back any part of the premium he paid. PurposeThe purpose of life insurance is to give an amount of cash at the death of the policyholder. Some plans also give payouts at regular intervals after the maturity of the policy.The purpose of general insurance is more direct. A payout takes place only at the time of unexpected loss, like an accident or a theft.