General Insurance Vs. Life Insurance
Life insurance is a non-personal insurance contract. This means that the policyholder and the person being insured do not have to be the same person. General insurance is always a personal contract where the insurance company contracts with the proposer directly for insurance protection.
Both life insurance and general insurance accept premiums in exchange for insurance benefits. Insurance premiums are invested into bonds or bond-like investments that produce stable and consistent returns for the insurance company. The investments. plus premium payments, also ensure that the insurance company can pay the promised Demerits that are outlined in the insurance policy. When we lie a claim, both types of insurance require a claim form that we want to fill out. The payment of benefits, and the amount of the benefit that is payable, are always spelled out in your insurance contract.
Life insurance insures one’s life or the life of someone that he/she has an economic interest in, like spouse, children, siblings or business partners. When the insured individual dies, the life insurance policy pays a death benefit that is fixed. This is called a valued contract. A valued contract pays a fixed sum of money, regardless of the nature of the loss insured by the contract.
General insurance insures homes, automobiles and other personal property. This type of insurance is sometimes referred to as “property and casualty” insurance. General insurance is indemnity insurance. Indemnity insurance pays just enough money to insured to repair or replace the insured property.
The benefit of life insurance is that it pays off any financial obligations insured have left after his/her death. It can pay more than that, however, because life insurance pays a fixed amount. Death benefits can be used to create wealth for the surviving beneficiaries, or they can be used to replace the primary income earners salary for a surviving spouse. General insurance is beneficial in that the insurance ensures that, almost regardless of the damage done, that the property will be repaired or replaced. While general insurance generally has a maximum pay-out determined by the value of the property, it does not pay a lied amount, so you won’t have to guess at how much insurance you need to purchase.
Both types of insurance are necessary to protect our life and property. They catch serve a different function arid fill specific roles in our insurance plan, When buying 1ife insurance, only buy enough insurance lo cover our current and expected future financial liabilities, When we purchase general insurance, the maximum coverage should riot extend beyond the total replacement value of our property.
Risk is certain though time of death is uncertain in Life Insurance Contracts whereas in General Insurance occurrence of event is uncertain.
Life Insurance is generally for longer period as compared to general insurance. General insurance is taken generally for one year.
In life insurance contracts, insurable interest must exist at the time of taking policy but in general insurance it must exist at time of taking the policy and at the time of loss
Payment of premium
In life insurance, payment of premium la monthly, halt yearly or yearly but in general insurance It is paid in lap sum at the time of taking policy. In life insurance premium rates are fixed on the basis of nature of rack and death table prepared on scientific basis. But In general insurance premium is determined according to the type of risk involved.
Indemnity of loss
The law of indemnity doesn’t apply in life Insurance but it is applicable in case of general insurance.
The object of life insurance is the security and the investment. In general insurance the object is to protect from risks.