Life Insurance and General Insurance
Life Insurance vs General Insurance
When buying insurance, insurance transfers a risk from an induvial or object to an insurance company. That is done by purchasing insurance for a monthly or premium annual premium. The insurance company then takes on a risk and ensures that money is available when the insured event occurs. The two most commonly purchases insurances in South Africa is life insurance and general insurance. We will look as life insurance vs general insurance below.
Most people believe that these are the same when they are in fact not.
The Type
People consider life insurance to be non-personal. By saying this, it is meant that the policyholder, as well as the person being insured, does not have to be the same person – you can thus take life insurance out on someone else than yourself.
General insurance, on the other hand, is always personal. One contracts general insurance with the policyholder directly for insurance protection.
Significance
Life insurance is there to ensure that your life or the life of another that you have an interest in (usually an economic interest) such as your life partner, child, other family members or business partners is covered.
When the individual that you have insured dies, insurance pays you a death benefit. If you have insured yourself, insurance will pay a death benefit out to the beneficiary you select. General insurance insures homes, vehicles and other personal property such as household items or jewelry.
It is thus there to insure these material things rather than a person. One uses general insurance to cover material things that you cherish.
Benefits
People design life insurance to pay out a fixed amount of money when you pass away. This money is paid to beneficiaries as set out by you in the policy. One can use the cash that the insurance pays out to settle any financial obligations you leave behind or provide financial security for family members in other areas where they need it.
You can also determine where exactly the insurance should use this money by stating so in your life insurance policy plan. People deign general insurance to be beneficial to the policyholder.
It does not pay out fixed amount and simply covers your loss.
Conclusion
If your budget allows for it, it will be great to get both types of insurances. They can both be your necessary to protect your family and the lifestyle you have created for them.
Each has its different function as can be seen above and because of this, they each serve to fill a specific role in your life. You should decide about the decision to buy each with the other in mind.
If you cannot afford both, it is important to prioritize your specific needs when making the decision about which type would be more beneficial to you and your family.
We hope that this life insurance vs general insurance comparison can help you make a better decision.
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All info was correct at time of publishing