Distinguish Between
Life Insurance and Fire Insurance
HSC Board – Organization of Commerce and Management – Notes, & Distinguish Between, difference between Life Insurance and Fire Insurance , study notes, studies material, studies notes – according to the New Textbook.
| Sr. No | Basis 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 | A contract which insurer promises to pay compensation to insured if something happens to the subject matter due to fire or related events. |
| 2. | 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. |
| 3. | 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. |
| 4. | 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. |
| 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. | 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 |
| 10. | Beneficiary | The beneficiary can be insured {if she/he survives the selected term} or else the nominee or the legal heir on the death of assured | The beneficiary is the inusred who has insured the property or good |