Marine insurance and Life insurance have very different characteristics from each other. One is done and paid to ensure a human life, whereas the other one is to protect any goods or cargo.
Key Takeaways
- Marine insurance covers losses or damages to ships, cargo, and other marine assets during maritime transport, protecting against perils at sea.
- Life insurance is a long-term contract that provides a payout to beneficiaries upon the policyholder’s death, offering financial support for dependents.
- The primary difference between the two lies in the assets they protect: marine insurance focuses on maritime assets. In contrast, life insurance addresses financial security for beneficiaries in case of the policyholder’s death.
Marine Insurance vs Life Insurance
The difference between Marine insurance and Life insurance is that marine insurance is a policy that will protect mostly cargo, ship, and transport-related machinery. Also, the premium is done on a lump-sum basis in marine insurance, whereas life insurance premium is collected on an instalment basis.
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The area that marine insurance covers are extensive and come with various types of insurance policies according to the needs. It mainly ensures any machinery related to a ship, transporting cargo, freight insurance and many others.
The definition of life insurance is pretty straightforward. You will pay a certain premium to the company to insure an individual or family.
It is a contract between the policyholder and the insurer covering a plan.
Life insurance comes with two types of policies, mainly as it does not cover a wider area like marine insurance. Though, you may choose from different sets of plans to invest in the future.
Comparison Table
| Parameter of Comparison | Marine insurance | Life insurance |
|---|---|---|
| Risk | The risk of marine insurance is uncertain. It may or may not arise in the insured timeline. | In the case of life insurance, the risk is absolute because death is inevitable. The company must pay the total amount during maturity or at the policyholder’s death. |
| Period | The duration of marine insurance is usually shorter. The maximum time available for marine insurance is one year. | Life insurance is done for a longer duration. A life insurance policy period varies from 10 to 30 years. |
| Nature | Marine insurance provides you with a contract of security or protection of the goods/cargo. | Life insurance does not provide you with a contract of indemnity. They will offer you the amount after the death of the policyholder. |
| Premium | The premium rate is different for marine insurance and could also change depending on the risk. | Life insurance premium calculation is straightforward. It is done according to the policyholder’s age, health, and plan they are choosing, and it does not change. |
| Surrender | Once you’ve done the marine insurance, you cannot surrender the insurance. | In life insurance, the policyholder can also surrender the insurance and get a surrender value. |
What is Marine Insurance?
It is an insurance designed to cover all the risks and unforeseen accidents concerning ships and cargo. Different types of insurance policies are available, depending on the needs and the type of business.
As the name suggests, it is generally used for Sea transport and provides security against any natural disaster, damage to a ship, loss of goods, etc.
Different types of Marine insurance can be described as follows –
- The first one under this marine insurance is Hull & Machinery insurance. It covers the vessel’s crucial parts and all the necessary onboard machinery. In any unforeseen event, if they get damaged, claims can be made.
- The most important aspect of marine insurance is cargo insurance. It protects the cargo against any losses. If it gets damaged in any way, the cargo owner gets paid for the damage.
- More policies, such as – The time policy, will be valid for a specific time. Voyage policy, which will ensure a particular voyage. Valued policy, in which case the value of cargo and ship will be calculated and then the premium plan is selected.
- You can also claim liability insurance in case of ship crashes or other incidents.
Marine insurance has always included complex methods and straightforward dealings. It offers a wide area of coverage through different policy plans.
For merchant traders or business persons related to import/export, marine insurance will be beneficial in the long run.
What is Life Insurance?
Life insurance can be described as a way to be prepared financially after the policyholder’s death. No one knows what life has stored for them.
In exchange for a little premium, you will get certainty financially.
One of the most significant advantages of life insurance is that it saves you from income tax. You could build a lump sum capital for when you are old, get a better retirement plan, maybe clear off any pending loans, etc.
Having a life insurance policy may not seem like everything, but it would help you sleep better at night, thinking your loved ones won’t have any harmful impact financially. It takes a minimal premium to care for your family financially in the event of the earning person’s death.
- The premium of life insurance is calculated on the age, the person’s health and the insured policy amount.
- You may need to perform some medical tests in some cases.
- There are two types of life insurance, the first known as term insurance, that can last from 1 to 30 years. When the policy expires, you will get the matured amount.
- The second one is permanent life insurance which does not come with an expiry date. It is more expensive than term insurance and more profitable as well.
Before going for an insurance policy, know what you are aiming for. Term policies usually meet the usual requirements for the majority.
Most of all, don’t leave your family members unprotected or uncertain.
Main Differences Between Marine Insurance and Life Insurance
- Life insurance comes with tax concession, but marine insurance does not.
- Life insurance’s main goal is the future’s security, whereas marine insurance is the protection of goods.
- You can surrender the life insurance policy but not marine insurance.
- In life insurance, the insured person gets a share of the profit, but not in marine insurance.
- The premium is made on an instalment basis in life insurance, whereas in marine insurance, it’s on a lump-sum basis.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
