Insurance is a contract designed to protect the interests of policyholders or beneficiaries in the face of various uncertainties in life. There are two broad categories of insurance contracts in India – life insurance and general insurance. Unfortunately, there is some confusion about the difference between life insurance and general insurance.
In the following sections, we discuss the key differences between life insurance and general insurance and the main characteristics of these common types of insurance.
What is Life Insurance?
Simply put a life insurance policy is life insurance. It is a contract whereby the insurance provider provides financial compensation to the beneficiary in the event of an unfortunate event covered by the policy, such as the untimely death of the insured. In exchange, the policyholder pays a predetermined amount as either a regular premium or a single premium.
A life insurance policy covers a certain period of time, and if the policyholder survives, they are entitled to a maturity benefit under the terms of the contract. People choose life insurance for financial protection during unprecedented times.
What is general insurance?
General insurance is any policy that covers assets and valuables such as vehicles, home, travel and health against damage, loss or theft, among many other liabilities. The key difference between life insurance and general insurance is that the latter provides financial protection against damage or loss other than the physical body.