Key Differences Between Life and General Insurance

July 19, 2024

Life insurance and general insurance are two different forms of insurances. General insurance covers any other risk except for life-risk of the person injured. Life Insurance covers only the life-risk of the person insured.

In a table below, we have covered all the key points between Life Insurance and general Insurance:

Key Points	Life Insurance	General Insurance.
Meaning	It is an insurance contract, which covers the life-risk of the person insured.	It is an insurance that is not covered under Life insurance.
Form	It is a form of investment.	It is a contract of indemnity.
Term of Contract.	It's a long term contract.	It's a short term contract.
Premium	Premium has to be paid over the year.	Premium has to be paid lump sum.
Insurance claim	Insurable amount is paid either on the occurrence of the event, or on maturity.	Loss is reimbursed, or liability will be repaid on the occurrence of uncertain event.
Insurable Interest.	Must be present at the time of contract.	Must be present, at the time of contract and loss both.
Policy Value.	It can be done for any value based on the premium policy.	The amount payable under life insurance is confined to the actual loss suffered.

In conclusion, Life insurance has a component of savings and General insurance has no such component. Life insurance is an insurance against life- risk only and General Insurance is insurance against motor, fire etc.

HDFC LIFE offers various plans under LI and GI both for you to choose from as per your need and risk appetite.

FAQs on What are the key differences between Life and General Insurance?

1. What are two basic types of insurance?

A. Life insurance and general insurance are two different types of insurance. While general insurance covers any other risk except for life-risk of the policyholder, life insurance covers mainly the life-risk of the insured person.

2. How does the coverage provided by life insurance differ from that of general insurance?

A. The key difference between coverage of life and general insurance is the coverage of life of the policyholder. Life insurance provides financial protection through a sum assured to the policyholder's nominee/beneficiary in case of the insured's death. General insurance does not cover the life risk of the policyholder, and it provides coverage for damages or losses to the insured's assets like home, car, etc.

3. Why is general insurance important?

A. General insurance is important because it financially protects the policyholder from non-human life losses, such as assets of the insured (including car, home, business and other valuables). Having general insurance safeguards your nominees from such losses and also saves you, the policyholder, from the constant mental pressure of mishaps in life.

4. Which is the best life insurance?

A. Term life insurance is often considered the most suitable life insurance as it offers a high sum assured at affordable premiums when compared to other insurance products such as ULIPs or money-back plans.

5. What is general insurance, and what are its features?

A. Policyholder wherein the insurer promises the insured to cover non-life General insurance is a contract between the insurance company & the risks such as burglary, fire, legal liabilities, personal accident, etc., including the financial loss associated with assets like home, car, etc. Health insurance, travel insurance, home insurance, commercial insurance, and motor insurance are some of the types of general insurance.

Sources:

https://irdai.gov.in/web/guest/non-life2

https://irdai.gov.in/en/web/guest/life3

Key Differences Between Life and General Insurance – HDFC Life (2024)