Differences Between Life, General and Health Insurance

In developing countries, such as Laos where insurance awareness is low, consumers may not able to understand the difference between general, life and health insurance.

In short, a general insurance contract typically compensates the insured (i.e. the person who takes out the insurance) against specified damages to the insured property. Examples of insured properties include your car, your house or a factory. Specified damages may be as a result of a fire, flood or an accident. So, the insurer will compensate you for the cost of repairing your damaged car after a collision or your house after a fire. 

A life insurance policy assures one’s life. It provides for payment of a stipulated sum to a designated beneficiary upon either the death of the insured person or after a set period in exchange for a premium. 

A premium is an amount which the life assured needs to pay to the insurer in exchange for the insurance benefit. This applies to all types of insurance. 

A health insurance policy reimburses the insured person the cost for a legitimate medical treatment or illness. The reimbursed amount could be partially or fully depending on the type of coverage. 

A general insurance contract is normally for any period up to one year whereas a life insurance contract is normally for a much longer period, say, five, ten, twenty or even the whole of life.

There are exclusions in any insurance policy. In the next edition, we will explain what are they and how they can affect insurance claims.

If you have any question, please send it to info@prudential.la