In this world, many accidents and bad events occur in just a short period which affects the life of people and people surrounding them. But to reduce such losses we have various Insurance and Assurance policies including Life Insurance, Car Insurance, Health Insurance, or Fire Insurance. The two most common Insurance policies that people opt for are Life Assurance and Fire Insurance Policy.
Life Assurance vs Fire Insurance
The main difference between Life Assurance and Fire Insurance is that a Life Assurance policyholder would receive compensation upon his death where the benefactors would be his/her family and a Fire Insurance policyholder would receive compensation upon the damage caused to his/her property due to fire or a natural incident.
Life Assurance policy is a policy that takes care of your children or your family upon your death. A certain amount of money is paid to your children or your family upon your death so that they could be supported monetarily. This amount of money could help children in paying for their education and also paying off their loans.
Fire Insurance policy is a policy that is related to damage to your property, whether it is in the form of lightning, fire, accidental fire, explosion, implosion or any other natural incident which causes harm to your property, then the policy benefactor would receive compensation from the insurance company.
Comparison Table Between Life Assurance and Fire Insurance (in Tabular Form)
| Parameter of Comparison | Letter of Credit | Line of Credit |
|---|---|---|
| Concept | It ensures a sum of money to the family of the policy holder upon his/her death so that the family could be better off monetarily. | It ensures compensation mainly on the damage of the property due to accidental fire like lightning, explosion or implosion. |
| Objective | The objective is to provide monetary support and protection to the surviving family members of the policy holder concerning their financial condition. | The objective is to protect the surviving members from financial losses from fire damage, explosion, theft, etc. while the home is being repaired. |
| Premium Plan | The premium for Life Assurance is based on annual payments but could also be paid monthly or half yearly depending on the suitability of the policy holder. | Premium for Fire Insurance is based on the value and the location of the property. |
| Suitability | This policy is for people who are not financially free and wants to take care of their family after they are long gone. | This policy is for homeowners, factory owners in which there are heavy machinery, people with real estate, etc. |
| Benefits | Apart from the tax benefits you get on this policy you can choose the premium plan according to your suitability. | This policy is helpful for business owners for protecting them against fire incidents and outbreaks. |
What is Life Assurance?
People who want to look out for their families and who want to provide better for their families generally opt for this policy. Life Assurance is a policy where a person pays a set amount of premium that could be a monthly payment, half-yearly payment, or a yearly payment concerning the amount his surviving family members are going to get after his death.
Life Assurance policy is a policy that takes care of your children or your family upon your death. A certain amount of money is paid to your children or your family upon your death so that they could be supported monetarily. This amount of money could help children in paying for their education and also paying off their loans.
What is Fire Insurance?
Fire Insurance is like a contract between the insurance company and the person applying for the policy which is based on the condition that if the property gets damaged due to fire, accidental fire, explosion, implosion or a natural incident than the insurance company will protect that person against monetary losses while their home is being repaired in that case.
It is also beneficial for people that are homeowners or are in real estate so that their assets and interests could be protected. Fire Insurance policy is a policy that is related to damage to your property, whether it is in the form of lightning, fire, accidental fire, explosion, implosion or any other natural incident which causes harm to your property, then the policy benefactor would receive compensation from the insurance company.
Main Differences Between Life Assurance and Fire Insurance
- Life Assurance guarantees an amount of monetary sum to the surviving family members of the person who opted for this policy. Fire Insurance prevents the loss of monetary funds while the property is being repaired due to damage caused by fire incidents.
- Life Assurance can help in the education of children and to pay off home loans by the partner of deceased which he/she would not have been able to do without the compensation. Fire Insurance protects assets like businesses and homes from going bankrupt due to fire incidents and natural causes.
- The premium of Life Assurance can be paid monthly, half-yearly, or yearly based on the amount of the Insurance policy. The premium for Fire Insurance is set based on the location and value of the property of the person applying for this policy.
- Life Assurance can be sometimes a complex process if the insurance is for estates. The premium for Fire Insurance changes if the location and value of the property changes.
- There are Tax benefits on Life assurance policy which could be helpful for the person applying for this policy. There is also some deduction on property tax on Fire Insurance which could positively help the benefactor.
Conclusion
There is a lot of struggle and problems in the society we live where unpredictable things happen all the time. So, it is better to give your family and business a better chance to succeed. Insurance Policies like Life Assurance and Fire Insurance can positively help your family and business, but it’s up to you whether you want to take that help or not.
References
- https://www.cii.co.uk/media/6559355/hkd_iti_syllabus_2015_v1.pdf
- https://www.jstor.org/stable/pdf/24671064.pdf