The following are the differences between life insurance and other forms insurance
such as a fire marine and miscellaneous insurance. 1) Happening of event: The event insured
against in life insurance is a certain event, the only uncertainty
being the time when the event will occur. But in case of fire and marine insurance
the events insured against may or may not take place at all or may tale
place wholly or partly. Thus in life
insurance , every policy will become a claim sooner or later but it is not so in other insurances.
2) Partial Loss: Life insurance is a contract
to pay an absolute amount on the maturity of the policy and there is no
possibility of partial losses but the other insurance are indemnity contracts
where only the actual amount of loss
will be payable irrespective of the assured sum. 3) Risk assessment: Risk classification is
generally more simple in life
insurance chan in the others forms of insurance. Here all the lives
are divided into three groups: Standard sub-standard and uninsurable. But of property insurance. the classification is more complex e.g. in
marine insurance. the risk may be divided according to the type of vessel.
voyage, season etc. So is the case of
fire and other insurance.
4) Period:
In most forms of insurance the policy is taken for one years of even for
a shorter period but in life contracts
the insurance is taken for very long period.
5) Premium: In life
insurance the premium are charged
generally on level premium plan which means that the premium charged in the
initial years of the policy are higher than the actual cost of insurance but in
fire and marine insurance contract , the premiums are just sufficient to cover
the actual cost of insurance it contains
both the investments and protection elements but in the fire or marine contracts there
exists the protection element only.
6) Insurable Interest: In life insurance the insured
must have the insurable interest when the policy is taken. but in marine
insurance he must have it when the loss aries. In life insurance the insurable interest must be present at
both the times, when the policy is taken and when it becomes a claim.
7)
Higher hazard: In life
insurance the hazard increases from
year to year. This happens in fire and marine insurances also but there the
subject matter may be kept in good
condition by repair or the
replacement or worst parts: but
in life insurance the chances of death go on increasing with
increased age whatever precautions may
be taken by one about one’s health. In spite of the higher hazard from year to year, the same premium rate is
charged in life contracts.
8) Procedure:
Medical examination is required
before a life insurance is granted whereas survey is made for before
a property is insured.
9) Amount: Life
insurance can be taken for any amount
depending upon the premium paying
capacity of the insured. But in other
insurances policies can be taken up to the value of the property
10) Transfer: A life police
can be transferred either by
assignment or by nomination. But in other insurance the financial interest can be transferred only by
assignment with the prior permission of
the insurer.
11) Surrender: A life policy
can be surrender by the insured
before its maturity. But in other insurances, it cannot be done.
12) Claim:
The claim money in life
insurance is an agreed amount as the
insured sum which is fixed in advance by the insurer as well as the insured.
Claim money in other insurances arises
only in case of
loss due to risk.