Distinguish between the following:
Life insurance & Fire insurance
ANSWER:
Basis of Difference
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Life Insurance
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Fire Insurance
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Compensation
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Compensation is paid either at the time of the death of the insured or at the maturity.
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Compensation is paid only in the event of loss due to fire. Nothing is paid otherwise.
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Duration
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The duration of life insurance is long; it is typically from 5 years to more than 25 years.
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It does not generally exceed 1 year.
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Indemnity
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The principle of indemnity does not apply here, as the life of the insured cannot be compensated.
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Compensation is based on the principle of indemnity.
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Insurable interest
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Insurable interest must exist at the time of taking the policy and not necessarily at the time of receiving the claim.
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Insurable interest must exist at the time of taking the policy and also at the time of receiving the claim.
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Subject matter
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The life of the insured is the subject matter.
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The goods and property of the person make the subject matter.
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Measurement of loss
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Loss incurred cannot be measured.
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Loss incurred can be measured.
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