What’s the difference between Life Insurance and General Insurance?
Everybody tells you that you should get some form of security in your life, both physically and financially. And most people’s idea of financial security is insurance. Hence you always receive that advise of buying insurance from every family member, relative, and friend. But despite giving this advice, nobody talks to you about the different types of insurance that are available to you. It is like someone sending you to the market without telling you what to buy. Hence, it becomes your responsibility to know the extent of insurance coverage you can have.
Firstly, there are two broad classifications that every type of insurance sold falls into. There are life insurance and general insurance. However, do you know what either of them are or how they differ from each other? Here is a look into the differences between life insurance and general insurance:
Life insurance is a type of insurance that provides financial support to your family in case of an unforeseen event. It essentially is a financial safeguard for your family against any unfortunate event against your life or well-being. This unfortunate event often refers to death. However, it can be different depending on the exact life coverage that you buy. Moreover, may times, life insurance does more than just financially secure your family. It also serves as a way to invest or save money in some cases. Here are various types of life insurance:
- Term insurance
Term insurance is usually issued for a fixed term or a period. If the policy holder dies within this term, the family members or nominees of the insured can claim the insurance money. Otherwise, there is maturity benefit in the policy.
- Whole life insurance
Whole life insurance is similar to term insurance in many ways, except for one. It provides coverage for life. This means that the policy will financially secure the policyholder’s family throughout their lifespan.
- Endowment plans
Endowment plan is a type of life insurance policy that can be used as a money saving tool. It provides a death benefit amount if the insured person dies during the policy term. In addition, it offers the amount accumulated as savings throughout the policy term as a maturity benefit back to the policyholder.
Known as unit-linked insurance plans, ULIPs are plans that offer wealth generation through market investments along with life coverage.
If you are curious to know about the premium that needs to be paid for a life insurance, you can alwayd
While life insurance covers their family against the financial impact of the death of a person, general insurance policies also cover against other dangers in a person’s life. Basically, anything that is not life insurance is covered under general insurance. This type of insurance covers various types of risks and different things. Here are a few types of general insurance:
- Health insurance
Health insurance is a type of general insurance that provides coverage for the various expenses that arise in medical emergencies. Once, you buy this policy, you can seek coverage from the insurance provider for any ailment and injury that is within the policy’s extent of coverage.
- Travel insurance
Getting travel insurance is a very important part of planning a trip. Travel is an exciting but risky experience. While you are in a foreign country, numerous things can go wrong. For example, you could have medical emergency or lose your valuable belongings. Travel insurance secures you against such issues during travel.
- Motor insurance
A motor insurance policy provides protection against various types of damages to your vehicle caused by accidents, theft, vandalism, etc. It covers the repairs of your car in situations like these.
The key difference between life insurance and general insurance is the goal they achieve. Life insurance covers your family in the case of death. Whereas, general insurance ensures that you and your family can have a better life. Where one offers comfort during a tragedy, the other helps you avoid tragedies in the first place. Both in their places have extremely important roles.