Difference: Life and General Insurance

When we talk about investment or financial planning, insurance always pops up in our minds. Isn’t it? There are many insurance companies in India. Some of them are life insurance companies, while others are general insurance companies. Though the primary goal for both types of insurance companies is to provide financial assistance, they differ from each other. So, what exactly is the difference between life and general insurance? Read on to dive into the details! 

Meaning and Types of Life Insurance 

Life insurance is a type of insurance that provides coverage for the life of an individual. In simple terms, it provides financial protection to the beneficiaries in the event of the demise of the life insured. However, in most cases, it also acts as a savings and investment tool that you can buy to accomplish your short- and long-term financial goals. 

Let’s take a closer look at the types of life insurance plans offered by insurance companies in India. 

• Whole-Life Insurance Plans: 

This type of life insurance provides lifetime coverage to the policyholder. Therefore, the sum insured payout would be given only after the demise of the life assured. There is no maturity benefit given to the policyholder for surviving the policy tenure under the whole-life insurance plans. 

• Term Life Insurance Plans: 

Unlike whole-life insurance plans, term insurance plans provide coverage for a fixed tenure. Under this type of plan, if the policyholder survives the policy period, then he will be eligible to receive maturity benefits. Moreover, in case of the demise of the policyholder, a death benefit would be paid to the nominees. 

• Endowment Plans: 

Endowment plans are a combination of savings, protection, and investment. Therefore, under this type of life insurance, the policyholder will get the bonus earned from the policy along with the maturity and death benefits, whichever the case may be. 

• Money-Back Plans: 

The policyholder starts to get a return on their money-back insurance plan after a fixed period of time, say 5 or 10 years. Therefore, this plan will help you get regular income in the form of a bonus declared by a life insurance company. 

• Unit-Linked Insurance Plans: 

ULIPs, or unit-linked insurance plans, provide policyholders with both life insurance coverage and wealth creation. A part of the premium paid by the policyholder is allocated towards a life insurance policy, while the other portion is allocated to the funds of their choice. 

Meaning and Types of General Insurance 

General insurance is a type of insurance that provides coverage for aspects and assets other than life. Some of the popular general insurance products include health insurance, motor insurance, travel insurance, home insurance, and more. For instance, if an accident happens in your vehicle, a third-party motor insurance policy will cover the cost of third-party liabilities. 

Here are some of the types of general insurance products that are available in India. 

• Health Insurance: 

Health insurance is a type of general insurance that provides financial protection to policyholders during medical emergencies. There are different types of health insurance plans such as individual health plans, family floater plans, comprehensive insurance, and more from which you can choose as per your choice. 

• Motor Insurance: 

Motor insurance protects the vehicle and offers coverage for the damage that happened due to accidents, theft, riots, terrorist attacks, or natural disasters such as earthquakes, floods, or cyclones. There are two types of motor insurance plans: car insurance and bike insurance. The features and benefits may differ in each plan. 

• Travel Insurance: 

Travel insurance can be bought by an individual before going on any specific vacation or trip. Under this type of general insurance, the policyholder will get coverage for the loss of baggage, delay or cancellation of flights, hospitalization expenses, and many more uncertainties that are happened during their trip. 

• Home Insurance:

It is hard to buy our dream homes these days. Therefore, home insurance protects the home and other goods of the policyholder against natural calamities such as floods or cyclones. 

Difference Between Life Insurance and General Insurance 

Listed below are the key differences between life and general insurance plans. 

Conclusion 

In conclusion, there are many general and life insurance companies in India. Each insurance product has its own set of features and benefits. Therefore, when purchasing any insurance policy make sure you evaluate your needs and choose the right insurance plan to secure yourself and your loved ones.

Also read: Term Insurance For NRI: Benefits And Process To Buy