Insurance is a vital tool that helps manage many risks affecting a family or a person. You must pay the yearly premium on time to keep the risk cover active. While you can opt for various types of policies, they are all listed under two broad options, life insurance and general insurance.
Before you decide to opt for any policy, you must learn about all the cover options that you can get under life and general insurance. Read on to know more about the benefits of policy options and if they differ.
What is Life Insurance?
Under this plan, the insurer will offer cover for losses related to your death. If you die during the policy period, the insurer will pay the policy amount to the nominee. This nominee must be a family member with the name listed in the policy. The claim amount can vary based on factors listed in the policy papers. The main purpose of this policy is to offer support in the form of money in case of the death of a family member.
What is General Insurance?
This type of insurance can be taken for any asset you own. Herein, the insurer will offer the cover and give money if the asset suffers any damage or loss. The insurer will pay for the costs for the repair of the damage or to compensate for the loss of the asset. The well-known types of plans under this category are home insurance, health policy, car insurance and many others.
Life Insurance vs General Insurance: Comparison
Here are some key variances between life insurance and general insurance: –
- Nature: When you get life insurance, it protects your family from money problems due to your untimely death. You must get a life cover if you are the sole earning member. In contrast, general plans protect you from any loss from various risk events that can affect your assets. Under this policy type, the insurer pays the money in case of any damage to a given asset.
- Payment: For a life cover, the insurer must pay the amount to the nominee whose name is given in the policy. This payment will be made in case of the death of the person. You can also opt for a life policy that will pay you a given sum after the policy term is over. The plan must be active at the time of the risk event given in the policy. In general insurance, the insurer must pay the money when the asset suffers any damage or loss. The policy terms will define the loss amount.
- Coverage: Life plan offers cover for risks to a person’s life. The loss here means death due to an illness or an accident. On the other hand, general plans offer cover for events like damage to assets such as cars, houses, and others.
- Premium: The premium for a life policy is fixed based on the coverage amount. This amount will not change till the policy is active. To continue the cover, the person must pay the premium before the due date. At the same time, the premium for general plans would depend on factors listed by the insurer. Here, the type of asset, its value, and risk factors are also taken into account. In the case of mediclaim, age and lifestyle are also considered.
- Tenure: The term of a life plan is usually longer. Here the premium is meant for a given period based on the policy term or the person’s age. This tenure can extend for a given period or till the person is of a certain age. In the case of general plans, the premium is meant for one year. It is up to the insured person to continue or stop the policy. If you want to enjoy the cover, it is vital to renew the policy every year.
- Sum assured vs sum insured: In the case of life insurance, the nominee is paid the sum assured as given in the policy. This is the amount for which the policy was taken and is paid in case of the person’s death. You can also opt for some policy riders when getting a new policy; it will increase the payout to the nominee as per the policy terms. The extent of risk cover for general plans is known as the sum insured. This is the maximum amount an insurer will pay in case of loss or damage.
- Beneficiary: The benefit of a life plan is for the person’s family or the nominee whose name is given in the policy. If there is a need, the insured can also change the nominee. For general insurance, the claim amount will only be paid to the insured person. Any nominee can get the amount only if the insurer has agreed to this at the time of issue of the policy.
When it comes to opting for life insurance or general insurance, you can, in fact, not compare the two. Life plans offer cover for the risks to your life, and general plans will offer cover for your assets. Having a balance of various policies is vital for a secure future.
Your focus should also be on getting high coverage for every policy you want. A higher amount will offer better safety from risks and events that may take place in the future.
It is vital to have suitable insurance coverage for your life and assets. You can not guess what events will take place in the future. Though, what you can do is prepare for any serious problems. For a safe future, in terms of money, you must opt for suitable insurance policies. Make sure you conduct in-depth research to know all the available general and life insurance plans to make the best decision. For any help, you can contact experts at Piramal Finance, the leading name in the sector. We can help you with the knowledge and know-how of applying for insurance and all kinds of personal loans to manage your finances swiftly.