General And Life Insurance Difference – You pay premiums to the insurance company to get life and general insurance. The insurance company compensates you or your nominee if you face any unfortunate event related to your life or property. Your financial planning is shallow if you don’t insure your life and property against any unexpected event.
To better secure your financial future and your family’s, you need to understand the difference between life insurance and general insurance.
There are two significant types of insurance:
- Life Insurance
- General Insurance
In life insurance, you get your life insured, and if anything happens to you, your dependents get paid by the insurance company. This way, you try to protect the future of your loved ones. So in this type of insurance, you name a person who will get the death benefits if you meet an untimely demise. And, if you stay alive, you get to reap the benefits at the policy’s maturity. So, it is an investment towards the future protection of yourself and those dependent on you.
What are the different forms of Life insurance?
Term Life Insurance
You get your life covered for a specific period in such a life insurance policy. If anything unfortunate happens to you in that period, the company is liable to compensate your family. But if you survive that period, you will receive no incentives in simple term life insurance. But there are variants of this policy that you can choose to receive benefits even if you survive the predetermined period.
It would help if you chose the endowment plan to get investment benefits and insurance benefits through a single policy. So the premium you pay under this policy will partially go to your insurance plan, and the remaining will be invested on your behalf by the insurance company. Your nominee receives the death benefits if you die during the policy term. But if you survive the period, you get both the maturity amount and the invested amount along with all returns on investment.
Under this plan, you get returns after a fixed interval. The preset interval could be of five years or ten years. It works the same way as the endowment plan, with the only difference being that you don’t need to wait till the maturity of policy to get rewards.
Unit Linked Insurance Plans
Under this plan, the premiums you pay partially go to insurance coverage, and the insurance company invests the remaining amount in market securities. So, in this policy, you get an opportunity to grow your money while simultaneously protecting yourself against any unfortunate event. This plan has a lock-in period of five years.
Whole Life Insurance
Under this plan, you get coverage for a lifetime, provided that you pay the premiums regularly. At your demise, your nominee receives the death benefits. This policy matures only with the death of an insured person.
General insurance is different than life insurance. It includes all insurance plans protecting your health and assets against theft, natural calamities, and accidents. So if you incur any damage or face a medical issue, the insurance company compensates you.
Below are the common forms of general insurance:
- Motor Insurance: It insures your motorbike or car against any future damages.
- Home Insurance: It protects your home or its belongings against any natural calamity or theft.
- Travel Insurance: You get coverage against any losses you incur during traveling.
- Health Insurance: It covers all of your medical costs
What is the difference between life insurance and general insurance?
As the name suggests, these are two entirely different forms of insurance. You get your life covered in life insurance, while general insurance protects you against losses in all other aspects of your daily life. However, below are the most common differences between life insurance and general insurance:
Life insurance policy spans over an extended period in comparison to general insurance. So, the tenure of a life insurance policy is around 15-20 years. In the case of general insurance, you may need to renew it annually.
You pay a one-off premium when purchasing general insurance, and subsequently, you pay at policy renewal time. Whereas in the case of life insurance, you pay regular premiums during the policy’s tenure.
Claim to Insurance Amount
In life insurance, your nominee gets a predetermined amount at the time of your death, or if you are alive, you get all the benefits at the policy’s maturity. While in general insurance, the insurance company compensates you against losses in your daily life matters.
Life insurance is not just insurance but an investment towards a safer future. At the maturity of the term, you receive enough benefits to start afresh. While in the case of general insurance, you only reap the benefits if you have encountered any losses.
Here are some examples of general and life insurance companies in the US.
- American General Life Insurance
- Legal & General America
- American General Life Insurance Company (AIG)
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