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Non-Life Insurance Policy: Types, Features, Benefits & Importance

Team AckoSep 1, 2021

Insurance in India can be divided into life and non-life. General insurance is highly popular as these policies provide financial compensation when losses occur. These losses can be caused due to various incidents like accidents, diseases, fire, natural or man-made mishaps, etc.

Non-Life Insurance Policy

What is a Non-Life Insurance Policy?  

The definition of non-life insurance is, the losses that are incurred from a specific financial event are compensated to the insured this is called non-life insurance. General insurance, property insurance and casualty insurance are other names of non-life insurance. It can be defined as any insurance that is not related to life insurance. People, legal liabilities and properties are covered under a non-life insurance policy. 

Examples of Non-Life Insurance:

There are some examples of non-life insurance policies that completely justify the meaning of the term. General insurance policy examples are homeowners policies, motor insurance policies, marine insurance, damage coverage from fire, calamities, theft, travel insurance or any online breach incident related to cybersecurity.  It is very difficult to measure the amount of damage caused by online incidents as the probability of occurrence of these risks is extremely difficult to ascertain. However, these can be covered with the help of a non-life insurance policy.

Key Features & Benefits of Non-Life Insurance Policy:

Non-life policies features include the following:

  1. The amount specified in the policy is the sum insured which, during the policy period, symbolizes the insurer’s maximum liability for claims. The insurer may specify the available amount of sum insured.

  2. The policy period of a non-life insurance plan is usually short, i.e., one year. The duration can be longer depending upon the type of insurance.

  3. The premium of the policy is paid right before the insurance company issues the policy. When an application for insurance is received by the company, they assess the risk involved depending upon the type of cover required. For example, under health insurance, the age, medical history, and current medical status of a person will be taken into account before the insurance policy is issued.

  4. Any claim is not fully borne by the insurance company. The policyholder needs to pay a small share, this share is called a deductible.

  5. If no claims are made under a general insurance policy, then the policyholder is awarded a discount called No Claim Bonus. This is a cumulative discount on the premium of the policy that increases till it reaches a certain number.

The benefits of a non-life insurance policy are:

  1. In case of health insurance, financial help is provided at the time of a medical emergency.

  2. It  is mandatory by law to buy a third-party motor insurance policy. It can take care of the compensation to be paid to the third party in case of damage to property or life.

  3. Home insurance covers the residential property of the policyholder against many unforeseen incidents, like fire, burglary, natural calamities, riots, etc. 

  4. Travel insurance plans offer insurance coverage to senior citizens and children as well. These help with issues like loss of baggage, accidents, loss of documents, etc. in a foreign land.

  5. Commercial insurance benefits the businesses with policies like employee benefits insurance, shopkeepers insurance, property and marine insurance, etc.

Policies of non-life available in India:

The types of non-life insurance policies in India are:

  • Marine insurance

  • Home insurance

  • Travel insurance

  • Health insurance

  • Motor insurance

  • Commercial insurance

In India, insurance policies for mobile, shop protection and bicycle are also provided under non-life insurance.

Is Non-Life Insurance Different From General Insurance?

No, general insurance is not different from non-life insurance, both are typically the same. General insurance or non-life insurance provides coverage to people, legal liabilities and properties. 

Difference Between Life Insurance and Non-Life Insurance:

Life insurance provides a lump sum amount of sum assured at the time of maturity or in case of death of the policyholder. Non-life insurance policies offer financial protection to a person for health issues or losses due to damage to an asset.

Comparison basis Life insurance General insurance
Definition Life insurance protects against life risks where the insured individual is promised by the insurance company for uncertainties and ambiguities of life-related to death. The insured individual is promised to be compensated by the insurance company for the damage caused due to an unfortunate circumstance or any loss. The valuable things of people are protected by general insurance.
Policy Period Long-term Short-term
Nature of the policy Life insurance is acknowledged as an investment, and it is not a contract of indemnity. Whereas general insurance can be termed as indemnity’s contract.
The insured The policyholder receives the benefits of the insurance coverage. The policyholder and the other people insured under the policy get the benefits of the insurance coverage.
Claims The sum assured is paid at the maturity of the policy or death of the policyholder Claim is processed as per the damage or financial loss suffered by the policyholder.
Cost of the policy Depends upon the amount of sum assured offered by the insurance policy Depends upon the value of the insured asset.

What is the Difference Between Participating and Non-Participating Life Insurance?

A participating policy in life insurance is a policy that offers a share of the insurer's profits to the policyholder. The profit is paid out in the form of bonus or dividends. Whereas a Non-Participating is the one that does not offer a share of the company's profit to the policyholder. Here is a table that shows the difference between the types of Life Insurance policies:

Type of difference Participating policy Non-Participating policy
Meaning The policy offers a share in the company's profit. There is no profit sharing in a non-participating policy.
Bonus Payout Annual Nil
Premium Higher than non-participating policy due to possible profit sharing. Lower than a participating policy.
Benefit Dual benefit of insurance and a share in company’s profit. No additional benefit apart from insurance coverage.
Examples Unit Linked Insurance Plans is one of the best examples of a participating policy. Term insurance is an example of a non-participating policy.

How to Apply for Non-Life Insurance? 

The person looking for a non-life insurance policy should be ready with a few details like name, identity proof, residential proof, proof of ownership of the asset to be insured. After choosing a suitable insurance company, one should approach the insurer and submit the application or proposal for buying an insurance policy. 

Importance of Non-Life Insurance Policy: 

Here are the reasons why buying a non-life insurance policy are important:

  • Financial security at the time of need is one of the major upsides of buying a non-life insurance policy.

  • The insurance company will bear the cost of a financial liability. Thus, such risks are carried over to the insurance company from the policyholder.

  • Peace of mind related to possible financial crises.

Inclusions of Non-Life Insurance Policy:

The inclusions of Non-life insurance are specific to the type of policy being purchased. For example, the inclusions of a Motor Insurance policy are Third-party Liabilities, Own Damage (Comprehensive policy), and a Personal Accident Cover. Under Health Insurance Hospitalization Costs, the cost of minor surgeries, ambulance charges, etc. is included. The inclusions of your insurance policy will be mentioned in the policy document.

Exclusions of Non-Life Insurance Policy: 

Some general exclusions of a Non-Life policy are raising a claim when the policy is not active, representing false or fraudulent information, producing fake documents, not raising a claim within the stipulated time, and not following the claim process diligently.

Things to Remember While Buying/Renewing Non-Life Insurance Policy Online:

  1. Check the terms and conditions of the insurance policy before policy renewal or purchase. They are available online on the insurance company's website. Also, go through the fine print. In case of doubts, do not hesitate to get them cleared by contacting the insurer before you buy the policy.

  2. Compare insurance plans from different insurance companies and review coverage. Also compare the cost of each plan.

  3. The most important thing to remember is buying a policy that is suitable for your needs. Do not buy coverage that seems unnecessary but good to have. It will only increase the premium. 

Step-by-Step Process to Renew Non-Life Insurance Online:

One can renew non-life insurance online by first choosing a suitable insurance company and then by visiting their website of the mobile application. Note that there can be slight changes in the renewal process of each insurance company. Here is the general process of renewing an insurance policy online:

Step 1: Login to your account.

Step 2: Select the insurance policy that is about to expire or already expired.

Step 3: Select the required coverage and click on renew 

Step 4: Go through the inclusions and exclusion, and terms and conditions of the insurance policy. Also, read through the fine print.

Step 5: Make payment and receive the policy at your registered email address.  

Why is it Important to Renew Non-Life Insurance Policy? 

The uncertainties of life can be heavy on everyone, thus, buying a non-life insurance policy is important. Since the duration of such policies is short, it is equally important to keep the policy active by renewing it upon expiry. It will help you avail continuous coverage against financial liabilities and make a claim for an unfortunate incident.

How to Claim Non-Life Insurance Online: 

Making an online claim is easy and can be done instantly via the insurance company’s website or their mobile application. Get in touch with the insurance company to understand the claim process and the set of documents that will help in getting the claim settled. Once you are ready with the required details, login to your account and click on “raise claim”. Attach the supporting documents and send the details to the insurance company.

Non-Life Insurance Claim Settlement Process:

The insurance company will review the claim application and begin an investigation into the matter. They may ask for more documents and evidence of the incident, for example, an accident claim, to help them understand the event better. Once all the process is complete the insurance company will settle the claim as per terms and conditions of the insurance policy.

Documents Required for Claiming Non-Life Insurance:

Usually the following set of documents will be required to claim against a non-life insurance policy:

  1. Proposal form

  2. Age proof

  3. Address proof

  4. Medical examination report for health and RC book of the vehicle for the motor insurance. 

  5. Income proof

  6. Invoice of the vehicle

Also, read: Health Insurance Glossary and Medical Terminology

Why Choose a Non-Life Insurance Policy by Acko?

ACKO is a digital-first insurance company that is gaining the trust of millions of people in India. One should choose to buy a non-life insurance policy from ACKO due to the following reasons:

  1. Quick claim settlement: ACKO strives hard to settle a claim as quickly as possible.

  2. No Paper-work: No hardcopies of documents are required to buy an insurance policy from ACKO.

  3. Minimum Follow-up: All the hassle and follow-ups will be carried out by ACKO on your behalf. You just have to sit back and focus on other important things.

Frequently Asked Questions:

1) What is the meaning of non-life insurance?

Non-life insurance is an insurance policy that covers medical emergencies, and the property of a person.

2) What is a non-life insurance company?

An insurance company that offers general or non-life insurance policy is called a non-life insurance company.

3) What is the difference in life and non-life insurance?

These are two major types of insurance policies offered in the country. Life insurance covers the life or death of the policyholder. On the other hand, non-life insurance covers health and property of the policyholder depending upon the policy.

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CIN: U66000KA2016PLC138288

IRDAI Registration No: 157

Category: Non-Life Insurance

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