Difference between Life Insurance Contract and Other Insurance Contracts.
Life insurance contracts can be distinguished from other insurance contracts on the following points:
Life Insurance Contract
i. Life assurance contract is not a contract of indemnity.
ii. Since life assurance contract is not a contract of indemnity, it is not governed by the doctrines of subrogation.
iii. In life insurance contract the event is bound to occur.
iv. Life insurance contracts bring a combination of protection and investment.
v. A life insurance contract is a valued contract and the assured is paid full amount even if few premiums are paid.
vi. A life insurance contract is a contract for a long period.
vii. Premium on life insurance contracts are calculated on the basis of the age of the assured.
viii. Life insurance contracts can be surrendered before maturity but after a period of 3 years.
Other Insurance Contracts
i. Marine and fire insurance contracts are contracts of indemnity.
ii. In fire and marine insurance the doctrine of subrogation to all rights, gains and benefits of the subject matter lost.
iii. In fire and marine insurance the event insured may not occur.
iv. Fire and marine insurance contracts serve as a protection measures and not an investment measures.
v. In fire and marine insurance, the insured cannot recover full amount of the sum assured when his loss is more than the sum assured.
vi. Fire and marine insurance contracts are undertaken for a maximum period of one year.
vii. In fire and marine insurance contracts, premiums are calculated on the basis of the value of the property insured.
viii. Fire and marine insurance contracts cannot be terminated by surrender of policy.