Types of General Insurance

What is a General Insurance

Difference between General Insurance and Life Insurance

General Insurance

Life Insurance

Applicability of claim

Arun took a Fire Insurance Policy for his factory. The Sum Insured for the factory was Rs.1 cr and the premium was Rs. 10 lakhs. In case of fire or loss due to any peril, the insurance company will pay the claim amount after the deductible (as applicable).

Arun took a Life Insurance Policy for Rs. 1 crore. He had to give an annual premium of Rs. 20000 for 50 years. After 10 installments, Arun met with an accident and passed away. Arun’s family received an amount of Rs.1 crore. The reimbursement under the life insurance is made either at the time of maturity or death.

Amount of Reimbursement

Sheela got her car insured for Rs.5 lacs. She got her car banged and her car’s bumper came off. The repair charges for the bumper was Rs.15,000/-. The insurance company will pay off the amount after the deductible. General insurance works as per the policy limits and conditions.

Sheela chose to buy a Life Insurance Policy worth Rs.50 lakhs. The total time for which she had to deposit the premium was 10 years. After 10 years, she received Rs. 50 lakh. The Life Insurance Policy is an investment policy which is paid on maturity of the policy.

Functional Period

Prakash bought a Fire Insurance for his factory and got the building, equipment, and other fixtures. The policy was issued on 2.03.2019 and will be renewed on 1.03.2020. The General Insurance Policies are issued for a period of 1 year.

Prakash bought an Endowment Policy which will pay him some proceeds on the maturity or otherwise pay some amount to his family members in the event of Prakash’s death. The Life Insurance Policy is issued for Life Time or till the time of the maturity period.

Payment of Premium

Madhur bought a car and got its insurance also. The next year, he sold his car. He bought a bike and did not get the renewal for the car. Under the General Insurance Policy, the premium will be paid for one year till the renewal. Madhur sold his car and hence, no renewal or no payment of premium.

Madhur bought a Money Back Policy for 20 years. He will have to pay the premium for 20 years with money being received after every 3 years. The premium will be paid till the total term of the policy, that is, 20 years. Under the Life Insurance Policy, the premium will be paid for the total term of the policy.

Insurable Interest

Rikant bought a Tata Safari in the year 2018. He got its insurance at the same time.The next year, he sold the car to Shweta and the policy was renewed again as the vehicle will be in use. The policy was renewed by Shweta and not Rikant. Under the General Insurance Policy, the insurable interest of the policyholder should be present at the time of renewal and the loss.

Rikant took a Term Plan and got his policy issued from ABC Life Insurer. It is important for Rikant to be present at the time of contract. Under the Life Insurance the individual who has the insurable interest should always be present.

Types of General Insurances in India