Life Insurance Fire Insurance

Sr.
No.
Basis of Difference

Life Insurance

Fire Insurance

1.


Meaning
A contract whereby the insurance company undertakes to pay a certain sum of money either on death or maturity (whichever earlier for a consideration (premium)
A contract which insurer promises to pay compensation to insured if something happens to the subject matter due to fire or related events.

2.

Who takes it
It can be taken by an individual for his own life or for his family members.
It can be taken by exporters, importers and shipping companies.

3.
Subject matter
In life Insurance, the life of the Insured is a subject matter.
In fire Insurance, the goods and assets or property of the insured is the subject matter.

4.
Insurable interest

It must exist (live) at the time of contract.
It must exist both at the time of contract and also at the time of loss.

5.


Period
The policy can be issued for any number of years, even until death of the assured.

It is generally for a short period like one year.

6.
compensation
It is paid either on death or maturity whichever is earlier.
It is paid only if there is loss due to fire during the term policy.

7.
Principle of Indemnity
It is not applicable as a human life cannot be valued in terms of money for calculating the actual loss.
It is applicable as insurance company compensates for the financial loss and the insured is bought back to the same financial condition that he was before the event

8.
Number of policies
Insured can take any number of policies on the same life.
Generally, only one policy can be taken. However, double insurance is possible.

9.
Surrendering of policy
The policy can be surrendered before the expiry of the term subject to certain conditions.

It cannot be surrendered.