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Sr.
No.
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Basis of Difference
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Life Insurance
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Fire Insurance
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1.
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Meaning
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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)
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A contract which insurer promises to
pay compensation to insured if something happens to the subject matter due to
fire or related events.
|
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2.
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Who takes it
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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.
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3.
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Subject matter
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In life Insurance, the life of the
Insured is a subject matter.
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In fire Insurance, the goods and
assets or property of the insured is the subject matter.
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4.
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Insurable interest
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It must exist (live) at the time of
contract.
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It must exist both at the time of
contract and also at the time of loss.
|
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5.
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Period
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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.
|
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6.
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compensation
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It
is paid either on death or maturity whichever is earlier.
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It
is paid only if there is loss due to fire during the term policy.
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7.
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Principle of
Indemnity
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It is not applicable as a human life
cannot be valued in terms of money for calculating the actual loss.
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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.
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Number of policies
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Insured can take any number of
policies on the same life.
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Generally, only one policy can be
taken. However, double insurance is possible.
|
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9.
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Surrendering
of policy
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The
policy can be surrendered before the expiry of the term subject to certain
conditions.
|
It
cannot be surrendered.
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Life Insurance Fire Insurance
