- Different duration
- Varied premiums
- Subject matter coverage
Difference between Life Insurance and Marine Insurance
Insurance is a contract between the insured (insurance provider) and the insurer (who seeks protection). The insurer protects the insured against potential losses in exchange for a premium. Life Insurance and Marine Insurance are two different types of insurance. Let's understand the difference between life insurance and marine insurance.
What is Life Insurance?
Life is uncertain and anything can happen to you anytime. Life Insurance is a protection plan that offers financial security to your loved ones when you are no more. In case of the policyholder's demise, death benefits are paid to the policy's beneficiary. Buying life insurance at a young age is an ideal plan as the premium charged is low.
People buy life insurance to protect their loved ones financially even in their absence. Life Insurance can be classified into two major types - Whole Life Insurance and Term Life Insurance. Let's understand both the types in detail:
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Whole Life Insurance
This insurance plan offers lifetime protection to an individual till the premium is paid. In case of the policyholder's demise, death benefits are paid to their nominee.
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Term Life Insurance
This plan protects an individual for a specific tenure or period. In case of the policyholder's demise, death benefits are paid to the nominee. If the policyholder outlives the tenure nothing will be paid and the policy will lapse as per the expiry date. The premium for a term insurance plan is lower as compared to whole life insurance.
What is Marine Insurance?
As understood by the name Marine Insurance is related to the protection against the damages or mishaps caused related to seas and oceans. Marine Insurance is a plan that offers protection from losses arising during the export/import of goods. The loss includes damage to machinery, goods, or any other transportation included. This type of insurance is generally purchased by exporters, importers, ship owners, logistic companies, or any other relevant parties that have an insurance interest. This insurance also covers transportation by air, rail and road.
Let's understand marine insurance with an example. Suppose Mr. Shyam (an exporter of perfumes) sent a perfume shipment to Bangladesh through Global Waterways. He doesn't want to take any risk and get his shipment insured. So he can buy marine insurance which can help him transfer the risk to the insurance company. If any mishap occurred during the way Mr Shyam can claim compensation from the insurer.
Distinguish between Life Insurance and Marine Insurance
| Parameters | Life Insurance | Marine Insurance |
| Definition | Life Insurance is a contract between the insured and the insurer that provides financial protection to the loved ones of the policyholder. | Marine Insurance is a contract in which an insurance company protects from losses or hazards related to seas and oceans. |
| Benefits paid | Death benefits are paid to the nominee in case of the policyholder's demise. | Compensation is paid for the amount of loss that occurred to machinery, equipment, or goods. |
| Subject Matter | Generally, people purchase life insurance for themselves or their family members. | Marine Insurance is purchased by exporters, importers or logistic companies for their goods, machinery or equipment. |
| Duration | Life Insurance is purchased for a longer duration such as 5 years, 10 years or whole life. | The duration of marine insurance is short generally less than a year. |
| Double Insurance | An individual can purchase as many policies as they want but within the range of their human life value based on their annual income. | An individual can buy more than one policy but the compensation amount paid is up to the loss incurred in mishap. |
| Payment of the sum insured | The sum insured in life insurance is paid to the nominee of the policy. | The sum insured is paid to the person who has bought the insurance or who has suffered the loss. |
| Exit from policy | The policyholder can take the exit from the policy during the policy tenure. | The individual cannot take an exit from the policy. |
| Premium amount | The premium amount charged by the insurance company depends on their age, medical history, lifestyle habits etc. | The premium depends on the value of goods, mode of transportation, route details, and various other factors. |
| Loss Value | The monetary value of loss cannot be calculated in the case of life insurance. | The monetary value of loss can be easily calculated. |
Conclusion
Life Insurance and Marine Insurance are two insurance designed for different purposes. Life insurance provides financial protection to the loved ones of the policyholder while marine insurance provides protection against losses incurred to goods, equipment, machinery or shipment in transit. You have understood the difference between life insurance and marine insurance. Now you can make an informed decision of choosing the right insurance.
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