General insurance is any type of insurance that is not determined as life assurance. They include; accident insurance, theft insurance, property insurance and many more.
In general insurance there is the value of risk, amount of payment, sharing of risks. This type of insurance helps us to protect our lives and the things we value most, such as our homes, our cars.
Pros of General Insurance
- Low tax
This relieves the member who has general insurance by only being taxed on the income then the insurance company does not make the deductions again hence relieving the person from the heavy burden of tax payment.
- Encourages saving
With general insurance, it is possible to save because someone is able to keep on paying the premiums which in the end it will be counted as the savings the person has made.
- Financial planning
The person is able to plan on how to pay the premiums and deal with other needs very well. This is enhanced as someone is supposed to pay the premiums per month hence it requires planning of the finances.
- Security of assets and life
With general insurance, someone has the assurance that his life and his property are secure. In case of any eventuality, the person has a guarantee that he or she will receive some compensation from the insurance company.
- Helps to boost the economy
The money that is paid as premiums to the insurance companies is normally put into other development sectors like trade and industries hence improving the economy of the country.
Cons of General Insurance
- Provision of a little amount of money
With general insurance, there is a risk of the company giving out the money that cannot really solve the situation hence it is not beneficial to the member as it will not be able to meet the loss that has occurred.
- It takes a lot of time to receive the money.
There are many legal formalities that need to be followed before the money is given to the member that has encountered loss.
- Does not compensate for all types of losses
When someone has general insurance, the company only pays for the losses that the member is paying the premiums. The member needs to cover different risks separately because the loss will be compensated depending on the number of premiums the person pays.
- It does not provide saving facilities like banks
With the insurance companies, they do not give interest on the savings like the banks. Saving with insurance companies, it is not easy for someone to benefit from the savings he or she is making.
- May lead to the commitment of crimes
The member who has really paid a lot of premiums may think that he or she in case she commits any crime the amount of premium he or she has paid will be used for compensation. It will not force him or her to get the money directly from his or her pocket.
General insurance covers all types of risks but the compensation will depend on the amount of loss suffered. Both life and other things that people value are covered.