How to Differentiate Between Life Insurance and General Insurance?
Today, you can easily get an insurance policy to cover almost every facet of your life. However, two of the most popular and foundational insurance policies are life and general insurance. While some might use the terms interchangeably, they are quite distinct. This article will help you distinguish between life insurance and general insurance.What is life insurance?
Life insurance policies are designed to offer financial compensation to the beneficiary if the policyholder passes away. To ensure that the beneficiaries can avail of the insurance coverage and death benefits when needed, the policyholder must regularly pay premium amounts according to the conditions laid down in the chosen plan. You can choose from various types of life insurance plans available. A few popular options are whole life insurance plans, term life insurance plans, endowment plans, money back plans, whole life insurance plans, and Unit Linked Insurance Plans (ULIPs).What is general insurance?
General insurance refers to all the insurance plans that protect everything apart from life coverage. Such valuables may include your health, home, possessions, etc. With general insurance policies, you can ensure that these aspects of your life are safeguarded from damage, destruction, natural disasters, theft, etc. To avail of the insurance coverage offered by such policies, you have to pay timely premiums. In return, the insurance company is liable to pay you the sum assured in case of damage or theft. More commonly bought general insurance policies include health insurance, personal accident insurance, home insurance, travel insurance, and motor insurance (car insurance and two–wheeler insurance).Life insurance vs general insurance: what is the difference?
Life insurance and general insurance differ from each other in the following ways:
Maturity benefit: Life insurance is also considered an investment as it offers maturity benefits after specific tenures. However, general insurance usually provides no maturity benefits but only pays an amount as a payout in case of unavoidable loss.
Premiums: You have to pay a fixed amount annually for a specific tenure when you purchase life insurance. However, with general insurance, you can pay the entire tenure in a lump sum payment while purchasing the policy.
Duration: While life insurance policies are generally long–term, general insurance policies operate for shorter durations.
Financial planning: You can count on life insurance policies as an avenue to plan for financial goals like children’s education, retirement fund, etc. General insurance is simply a protective measure and not one for investment.
Insurance amount claim: With insurance, the assured sum is paid upon the insured individual’s death, or if the policyholder survives then on maturity (depending on the type of plan). With general insurance, you receive reimbursement/cashless coverage only in case of unfortunate events, according to policy terms.
Now that you know more about life vs general insurance, you can ensure you have the policies required to provide you with holistic protection. If you are buying coverage for the first time, you can always seek the help of an insurance agent or customer service representative at the insurance company for guidance.Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.