When it comes to insurance policies, there are several types of it that you can buy to secure your assets and your life. It is vital to have insurance as it protects and ensures you when the need arises. So let’s look at life and general insurance and the difference between both.
What Is Life Insurance?
Life insurance is a policy which provides a life cover to the policyholder in return for paying premiums for a fixed period. In the event of death of the insured person, a lump sum amount is given to the beneficiary. You can also opt for other types of life insurance plans that enable long-term saving. With this, you can secure your loved ones and fulfil wealth creation goals. Another perk of purchasing life insurance plans is tax benefits where you can claim the premiums under Section 80C of the Income Tax Act, 1961. Also, the death and maturity benefit can be claimed under Section 10(10D). The multiple types of life insurance plans are:
- Term Plan
- Endowment Plan
- Money-Back Policy
- Whole Life Insurance
- Unit-Linked Insurance Plan
- Pension Plan
What Is General Insurance?
General Insurance covers every risk other than the risk of life. You can safeguard your health, property like house, vehicle, other assets from natural calamity and other disasters, etc. Such plans are contract of indemnity that secure your assets by reimbursing the losses. The types of general insurance are:
- Travel Insurance
- Fire Insurance
- Motor Insurance
- Home Insurance
Difference between Life Insurance Plan & General Insurance
|Life Insurance||General Insurance|
|Definition||Life insurance provides life cover to the insured person||General insurance provides cover for risks other than life|
|Tenure||Has a longer tenure||Has a shorter tenure|
|Premium||The premium can be paid regularly, quarterly, half-yearly or yearly||The premium has to be paid in a lump sum and at once|
|Insurance Claim||The amount is paid either on the occurrence of death or on maturity||The loss is reimbursed, or liability is repaid on the occurrence of unforeseen events|
|Insured Individual||Should be present at the time of purchasing the plan||Should be present at the time of purchase as well as on loss|
|Value of Policy||Value has no maximum amount as it varies from insurer to insurer||Value is restricted to the actual loss incurred|
Both insurance plans play a different role in the insured’s life by protecting certain aspects. Hence, you cannot choose between the two as they are distinct in nature and need both plans for a secure life.