Chapter 02 Difference Between Life and General Insurance
Insurance Quotient Boosters
- Insurance can be largely divided into Life Insurance and General Insurance.
- Life Insurance insures your income and the financial stability of your family in case you pass away. This is especially important if your family is dependent on you financially.
- General Insurance insures assets like health, vehicles, houses, travel experiences etc. In case of such assets are damaged, we can claim the insurance amount to cover our costs to repair them. We don’t have to borrow money for it.
Now that we have a sound understanding of what insurance is, let’s take a look at the different types of insurance one can buy.
- 1. Life Insurance
- 2. General Insurance
Life Insurance
Does life insurance insure your life? Not exactly. But you’re insuring a very important part of your life - your income and the financial stability it provides your family.
Let’s take an example. If both of your parents work and one of them passes away, who would support you? Would you be able to live in the same house? Who will pay the bills?
Now think about the future. If you and your spouse take a home loan together, what would happen if you died? The burden of repaying the loan would fall on one person.
In any situation where you’re responsible for someone or something, life insurance helps ensure there is enough money to pay your bills and meet your family’s needs after you are gone.
General Insurance
Apart from life insurance, can we have other valuables also insured?
Assets like your vehicles, house etc. have a value of their own and are susceptible to damages. Damage repair or the replacement of such assets is costly and we usually have to spend out of our savings or investments, borrow money from family and friends or sell other assets to raise money.
General insurance, also known as non-life insurance, offers a gamut of insurance covers against eventualities such as illness, property damage, motor accidents, etc. A specific general insurance cover can protect the economic value of the asset and prevent huge financial losses.
Suitable general insurance covers are necessary for every family. These assets are usually acquired after a lot of effort. Losses created by accidents, theft or catastrophes such as the tsunami, earthquakes, cyclones, etc. have left many homeless and penniless. Such losses can be devastating but insurance could help mitigate them.
Most General Insurance covers are annual contracts. However, there are few products that are long-term.
Let’s look at the different categories of general insurance that one could avail:
