What is the main difference between life insurance and general insurance?
The main difference is that life insurance covers human life and provides a payout upon death or maturity, whereas general insurance (non-life) covers material assets and liabilities like cars, homes, health, and travel against loss or damage.
📊 Key Comparison
| Feature | Life Insurance | General Insurance |
|---|---|---|
| Primary Purpose | Protects family/dependents after death | Safeguards assets against unexpected loss |
| Contract Duration | Long-term (decades or whole life) | Short-term (typically renewed yearly) |
| Payout Type | Predetermined sum assured | Compensation for actual assessed loss |
| Savings Component | Often includes an investment/savings feature | Pure risk protection with no cash/savings value |
💡 Core Mechanics
- Life Insurance:
- Acts as long-term financial security for loved ones.
- Pays a lump sum if the policyholder passes away.
- Some policies pay out a maturity benefit if you survive the term.
- General Insurance:
- Acts as a short-term contract of indemnity.
- Reimburses or pays for actual damages incurred.
- Covers diverse categories like health, auto, and property.