Insurance provides security and financial support to the insured in times of crisis between an insurance provider and the insured. Insurances come in a variety of forms. Health, life, and general insurance are the three main types of insurance in Australia. Life and general insurance are the focus of this inquiry.
Life insurance includes various products intended to provide financial protection in case of death or injury. Typically, general insurance includes cover purchased by individuals, such as travel insurance, and by organisations, such as product and public liability insurance and professional indemnity insurance. Unlike a life insurer, where the payment depends on the policy’s maturity, a general insurer pays you a lump sum if you suffer from a total and permanent disability or trauma.
Various types of insurance serve different purposes by covering different aspects of our lives. Unlike life insurance, which is designed to protect your loved ones financially in your absence, general insurance covers a wide range of assets, such as health, a home, and a vehicle.
Policy term
The policy term is one of the main differences between the two types. Life insurance generally covers a long time span. It is common for life insurance policies to last for 15 to 20 years.
On the other hand, general insurance policies are usually short-term plans that are renewed each year depending on which policy was chosen earlier.
Premium Payment
Life insurance premiums are paid either in a lump sum or at regular intervals. There are several types of recurring intervals, including monthly, quarterly, half-yearly, or annual.
Meanwhile, general insurance premiums are paid at the time of purchase or at renewal. General insurance policies are usually renewed annually. Travel insurance is one exception, where you pay a premium only when you purchase a specific cover.
Claim Process
Life insurance policies usually pay the sum assured to the nominee upon the policyholder’s death. Alternatively, the policyholder can receive the proceeds upon maturity. Insurance companies also provide interest on investments generated by money-back and endowment plans. Policyholders can avail of critical illness insurance benefits upon diagnosis of the disorder or health condition covered by the policy.
The company considers a particular event when filing a general insurance policy claim. For example, some general insurers only allow claims after a disease diagnosis, hospitalisation, or other medical emergency has been diagnosed. The same is true of travel, home, and vehicle insurance. They can only be claimed if there is some kind of damage or loss caused by accident.
Consider the example of income protection insurance claims. This requires you to contact your employer and insurer to fill out the claim form. Your claim will be assessed as soon as the waiting period (that could be 30, 60, or 180 days) you selected when you took out the policy ends.
Value of the Insurance Policy
Life insurance cover values are generally determined by policyholders. It is up to you to select the sum assured and to determine how much you can pay in regular premiums based on your needs. Upon the policy’s maturation, the sum assured will be paid back to you or to your nominee.
However, general insurance policies are influenced by the value of assets. A policy’s value is determined by different methods, depending on whether it is a benefit-based policy or an indemnity-based policy.
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