What is General Insurance and how is it different to policies offered by life insurance companies?
General insurance is often confused with typical life insurance policies, and it is essential to understand that both products are quite different in the protection that they provide for different events and needs.
Definition of General Insurance
General insurance is a non-life insurance policy designed to provide benefit payments in the event of a financial loss or damage to property. General insurance policies usually offer cover for properties, businesses, valuables and miscellaneous goods. Some general insurers will also provide cover for sickness and accidental injury. Unlike life insurance policies, general insurance does not cover death, however, in the event of natural disasters, such as floods, fire, earthquake, and cyclone, it will provide compensation when both death and damages occur.
What is general life Insurance?
In some cases, you may find general insurance providers that offer life insurance products. This is because the general insurance provider has partnered with a life insurance company that enables the general insurer to diversify on their product offerings for their customers. General life insurance is understood as life insurance products that you can purchase from a general insurer, with features and benefits that you can find normally in a policy that has been issued by a life insurance company.
It is crucial to compare the policies on offer and gain a clear understanding of the cover by reading the Product Disclosure Statement (PDS).
Different Types of Australian General Insurance Companies
The general insurance industry in Australia is comprised under the following categories:
- Personal lines insurers: predominantly deal with personal insurance needs of a family unit, such as valuables (jewellery, artworks), motor vehicle, home and contents, and personal liability. Examples of personal lines insurers include NRMA and AAMI.
- Composite insurers: offer a range of products for both domestic and corporate needs. Some notable insurance companies under this category include IAG, Allianz, GIO, QBE, and ING.
- Corporate insurers: are restricted to underwriting activities for large corporate insurance policies, such ACE and AIG.
- Niche insurers: are underwriting agencies in Australia that deal with specific types of risks that are often hard to place, and usually require the involvement of a number of different insurers. For example, Logins is an insurance company that covers livestock, which is not offered by any other providers.
General Insurance Products Available in Australia
There are five main types of general insurance products that you can obtain in Australia:
- Domestic insurance: policies are catered towards the protection needs of homeowners. Domestic insurance products usually cover buildings, contents, personal effects and liability towards third parties.
- Commercial insurance: focuses on the financial protection that a typical manufacturing business may require. There are different types of cover and options offered by most insurance providers, which may often include:
- Business interruption
- Accidental damage
- Machinery breakdown
- Glass break
- Fraud and embezzlement
- Liability insurance: is designed to provide cover in the event of property loss and against liability risks towards other entities. There are three types of liability insurance:
- Public liability insurance: provides cover in the event of a personal injury, property damage, and financial loss that affect another party.
- Product liability insurance: is designed to protect entities that may be liable for the injury or loss that has resulted from the manufacture, sale, supply or distribution of defective products.
- Professional indemnity insurance: is catered towards individuals whose roles are to provide advice or a service that may require certain skills and knowledge. It provides cover against liability for monetary loss, damage, or injury incurred from the professional’s mistake or failure to exercise a high level of care.
- Motor vehicle insurance: comes in two types - compulsory third party (CTP) insurance that covers against damages to the vehicle as a result of a personal injury or to others, and vehicle cover to protect against damages that affect the vehicle itself.
- Personal loss insurance: is a type of general insurance that provides cover for personal loss, other than to physical assets. There are three types of personal loss insurance on the market:
- Sickness and accident insurance: provides cover in the event that the insured is unable to work as a result of a sickness or accident and it replaces up to 75% of the insured’s income. Sickness and accident insurance may also fall under life insurance product category, however, if issued by a general insurance provider, it will usually have waiting period of 14 days and benefit period of two years.
- Travel insurance: is a type of cover that reimburses the costs resulted from:
- Trip cancellation, interruption or delay
- Illness, accidental death, disability, or any other events that occurred outside the control of the travel provider
- Loss of income
- Baggage loss
- Credit card fraud
- Emergency medical and hospital expenses
- Travel assistance services
- Pet insurance: is similar to health insurance for humans and it offers financial protection for an illness or accident that can occur to one’s pet. Pet insurance policies often provide cover for:
- Veterinary expenses
- Teeth cleaning
How is General Insurance Different to Life Insurance?
As previously mentioned, general insurance is designed to provide cover in the event of losses or damages other than those covered under life insurance. Therefore, if you are looking for financial protection in the event of your death, you may be able to find more suitable cover options from a life insurance company. That said, you can also apply for life and income cover through a general insurance provider.
There are five types of life insurance policies that are offered on the Australian insurance market:
- Life cover: pays a lump sum benefit amount to your nominated beneficiaries should you pass away or be diagnosed with a terminal illness with less than 12 months to live.
- Total and permanent disability insurance: provides financial support if you suffer from a permanent disability and you are unlikely to return to work ever again.
- Trauma (critical illness) insurance: provides a lump sum benefit when you have been diagnosed with a life-threatening medical condition.
- Income protection: generally insures up to 75% of your average income. It works to replace your income with a monthly benefit in the event of an illness or injury and you are unable to work temporarily. Some policies will provide more than 75% of your regular income but this extra portion must be contributed towards your superannuation.
- Funeral insurance: is a type of cover that pays a lump sum benefit so that your loved ones can keep on top of your funeral expenses should you pass away.
How Can I Obtain General Life Insurance Quotes?
You can obtain quotes for general life insurance plans only through a general insurance provider. It is important to remember that not all general insurers offer life insurance plans. However, you may want to consider getting quotes from Australian life insurance providers instead.
If you are looking to get a quote for life insurance, fill in your details on the enquiry form below. An insurance provider will be in touch with you to discuss possible options tailored to your needs. There is absolutely no obligation to sign up for a policy when making an enquiry.
Can I Buy Life Insurance through a General Insurance Provider?
Quick Answer: Yes
These days, general insurance providers also offer life insurance within their product portfolio. Such insurers offering this cover include:
While you are no longer restricted to only sickness and accident insurance through a general insurer, it is important to note that the level of cover and policy selections are often quite limited. The terms and conditions will also differ considerably compared to policies that are offered by life insurance providers. It is crucial that you read through the Product Disclosure Statement (PDS) to gain a clear understanding of the policy features and benefits.