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Life Insurance vs. General Insurance: What's the Difference?

Edited by Sawaira Riaz || By Sara Rehman || Updated on November 28, 2023
Life insurance provides financial protection against the death of the insured, while general insurance covers losses from specific events like accidents or theft.

Key Differences

Life insurance is a policy that pays out a sum of money upon the death of the insured or after a set period. General insurance, alternatively, provides coverage for losses and damages to assets other than life, such as property, vehicles, and health.
Sara Rehman
Nov 25, 2023
The primary purpose of life insurance is to provide financial security to the beneficiaries of the insured. General insurance, on the other hand, aims to protect the insured from financial losses due to specific incidents like accidents, theft, or natural disasters.
Sara Rehman
Nov 25, 2023
Life insurance policies often include both a death benefit and an investment or savings component. General insurance policies, however, typically do not have an investment aspect and are renewed annually or for specific terms.
Sara Rehman
Nov 25, 2023
The coverage of life insurance extends over a longer duration, often several years or for a lifetime. In contrast, general insurance covers shorter periods, usually up to one year, and must be renewed.
Sawaira Riaz
Nov 25, 2023
Life insurance can be further categorized into term life, whole life, and universal life insurance. General insurance includes categories like health insurance, auto insurance, home insurance, and travel insurance.
Harlon Moss
Nov 25, 2023
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Comparison Chart

Coverage Focus

Life of the insured.
Non-life assets like property, vehicles, health.
Sara Rehman
Nov 25, 2023

Primary Purpose

Financial security for beneficiaries.
Protection against specific losses or damages.
Sara Rehman
Nov 25, 2023

Policy Components

Death benefit, often with savings component.
Typically lacks investment aspect.
Sara Rehman
Nov 25, 2023

Duration of Coverage

Long-term, often years or lifetime.
Short-term, usually annual or specific terms.
Sawaira Riaz
Nov 25, 2023

Policy Types

Includes term life, whole life, universal life.
Includes auto, health, home, and travel insurance.
Sara Rehman
Nov 25, 2023
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Life Insurance and General Insurance Definitions

Life Insurance

Provides peace of mind regarding the financial future of one’s family.
Buying life insurance gave him peace of mind about his family's financial security.
Harlon Moss
Nov 14, 2023

General Insurance

Includes health, property, and liability insurance.
Her health insurance, a type of general insurance, covered her medical expenses.
Sara Rehman
Nov 14, 2023

Life Insurance

Can be term, whole, or universal life policies.
She opted for term life insurance for its affordability and specific coverage period.
Aimie Carlson
Nov 14, 2023

General Insurance

Offers protection against specific financial losses.
Their business’s general insurance protected against loss from theft and fire.
Sara Rehman
Nov 14, 2023

Life Insurance

Often includes a savings or investment component.
Their life insurance plan also served as a means for retirement savings.
Sara Rehman
Nov 14, 2023

General Insurance

Insurance covering assets other than life, such as cars or homes.
His general insurance policy covered damages to his car in the accident.
Sawaira Riaz
Nov 14, 2023

Life Insurance

Financial protection for beneficiaries in case of the policyholder’s death.
He purchased life insurance to ensure his children's future education expenses.
Sara Rehman
Nov 14, 2023

General Insurance

Usually renewed annually or for specific terms.
The company renewed its general insurance policy for its assets every year.
Aimie Carlson
Nov 14, 2023

Life Insurance

A policy that pays a sum upon the insured's death.
Her life insurance policy provided financial support to her family after her demise.
Sawaira Riaz
Nov 14, 2023

General Insurance

Does not include a savings or investment component.
Their travel insurance, a form of general insurance, offered no investment benefits.
Janet White
Nov 14, 2023

FAQs

Who benefits from a life insurance policy?

The beneficiaries designated by the policyholder.
Sara Rehman
Nov 25, 2023

What is life insurance?

It’s a policy that provides financial benefit upon the insured's death or after a set period.
Sara Rehman
Nov 25, 2023

What does general insurance typically cover?

It covers assets like vehicles, property, and health.
Sara Rehman
Nov 25, 2023

What are examples of general insurance?

Auto, home, health, and travel insurance are examples.
Harlon Moss
Nov 25, 2023

Can life insurance include savings?

Yes, some life insurance policies have savings or investment components.
Sara Rehman
Nov 25, 2023

What types of life insurance are there?

Term life, whole life, and universal life are common types.
Aimie Carlson
Nov 25, 2023

Is life insurance mandatory?

No, it’s a personal choice based on financial planning needs.
Janet White
Nov 25, 2023

How is the premium for life insurance determined?

Based on factors like age, health, and policy type.
Sara Rehman
Nov 25, 2023

What is general insurance?

Insurance covering losses and damages to non-life assets.
Sawaira Riaz
Nov 25, 2023

Do businesses need general insurance?

Yes, to protect against various operational risks.
Sara Rehman
Nov 25, 2023

Does general insurance cover natural disasters?

Many policies do, but coverage details vary.
Janet White
Nov 25, 2023

Is general insurance a long-term contract?

No, it’s usually for short terms, often annually.
Janet White
Nov 25, 2023

Does life insurance cover illness?

Some policies include critical illness coverage.
Harlon Moss
Nov 25, 2023

Can general insurance be customized?

Yes, policies can be tailored to specific needs and risks.
Janet White
Nov 25, 2023

What’s the difference between actual cash value and replacement cost in general insurance?

Actual cash value considers depreciation, while replacement cost covers the current cost of similar new items.
Sara Rehman
Nov 25, 2023

Is general insurance affected by location?

Yes, factors like location can influence risk and premiums.
Sara Rehman
Nov 25, 2023

Can you borrow against a life insurance policy?

Yes, if the policy has a cash value component.
Sara Rehman
Nov 25, 2023

Are life insurance payouts taxable?

Generally, they are not taxable to the beneficiary.
Harlon Moss
Nov 25, 2023

How do deductibles work in general insurance?

Deductibles are amounts paid out of pocket before insurance coverage kicks in.
Aimie Carlson
Nov 25, 2023

Can you change your life insurance beneficiary?

Yes, policyholders can usually change beneficiaries.
Janet White
Nov 25, 2023
About Author
Written by
Sara Rehman
Sara Rehman is a seasoned writer and editor with extensive experience at Difference Wiki. Holding a Master's degree in Information Technology, she combines her academic prowess with her passion for writing to deliver insightful and well-researched content.
Edited by
Sawaira Riaz
Sawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.

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