Differences Between Life Insurance and General Insurance?
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An insurance policy in simple terms is a mutual agreement between the insurer and the insured. The insured pays regular premiums to the insurer to avail of financial coverage in case of a mishap. The concept of insurance policies was launched to protect the lives and valuable assets of an individual and hence, life insurance and general insurance policies were designed.
What is life insurance? What are its types?
A life insurance policy is a safety net that covers your life. If the policyholder, unfortunately, loses his life within the policy term, a predetermined financial compensation shall be paid by the company to the appointed nominee.
A life insurance policy can help you take care of the needs of your loved ones even when you are not with them. Life insurance plans become all the more important if you are the primary earner in the family.
Different Types of Life Insurance
1. Term life insurance:
- The most basic kind of life insurance offering comprehensive coverage
- Affordable premiums
- Sum assured is paid to the nominee in case of the demise of the policyholder
2. Endowment plans:
- Offers dual benefits of investment and insurance
- Guaranteed returns and low market risks
- In the case of the death of the policyholder, the nominee is granted the death benefit, alternatively, the maturity benefit is awarded if he survives the policy term
3. Whole life insurance:
- Can provide coverage up to 100 years or till the time premiums are paid
- Offers extensive coverage and protection for the family at all times
- Once the policy matures, you are rewarded with maturity benefits
4. United Linked Insurance Plans:
- Combines the benefits of investment and insurance in a single plan
- Offers guaranteed returns along with life protection to the insured
- A partial withdrawal facility is available once the lock-in period is over
5. Money-Back Policies:
- Similar to endowment plans but pays out certain amounts at predefined intervals
- At maturity, a total of accumulated bonuses and maturity amount is paid out to the insured
What is General Insurance? What are its types?
Apart from the lives of your loved ones, there are some valuable assets that need protection too. General insurance policy offers coverage for the damages caused to non-life assets, due to natural calamities or other reasons.
Different Types of General Insurance
1. Health Insurance:
- Guards you financially at the time of medical emergencies
- Extra benefits can be added according to the needs
- Direct bill settlement facility available
- Numerous plans to cover the health of all
2. Motor Insurance:
- Offers financial compensation for the damages caused to all personal and commercial vehicles
- A comprehensive plan and a third-party plan are offered for the insured to choose from
- While third-party insurance covers for accidents caused by your vehicle, a comprehensive plan offers wider coverage and other benefits
3. Travel Insurance:
- Covers your baggage loss, trip cancellations, or other travel-related issues.
- Can even offer medical assistance for an emergency situation.
- Offers special plans for frequent flyers at affordable rates.
4. Home Insurance:
- Offers coverage for the damages caused to your house due to natural or man-made calamities
- Can offer extra benefits depending on the plan chosen
Difference Between Life Insurance And General Insurance
| Difference in | Life Insurance Plans | General Insurance Plans |
| Coverage | Offers financial coverage for life protection of self and family | Offers financial coverage for the protection of non-life assets, like home, car, etc |
| Policy duration and payments | This plan is available for a long-term duration with regular payments of premiums | This plan is available for a short-term duration and needs regular renewal. Generally, the entire payment is made at the time of renewal |
| Purpose of the plan | Provides the nominee with the sum assured in case the policyholder loses his life | Compensates for the loss or damages caused to the valuable assets due to natural or man-made reasons |
| Insurance claims | The company pays the insured amount either on the occasion of maturity or pre-mature death of the insured | The company pays a certain amount as compensation if an unfortunate event arises |
| Savings component | Investment options are available along with life protection | Not available |
Things to Remember Before Investing:
- Estimate your requirements and the budget before buying any insurance policy
- Do your research and compare plans from different companies to avail the best package with extra benefits
- Try to avoid over-insurance as this can cause financial distress
- Do read the terms and conditions carefully before buying a policy to avoid confusions
Author Bio
Paybima Team
Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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