Comparing life insurance and non-life insurance
When looking to purchase insurance, many people find themselves confused right from the start: should they choose life insurance or non-life insurance?
Both types are widely available in the market, yet they protect against different risks, with distinct contract terms and compensation mechanisms.
This article from Cathay Financial Group will help you clearly identify the differences, enabling you to select the right product and avoid either overlapping coverage or missing out on essential protection.
What are life insurance and non-life insurance?
What is life insurance?
Life insurance is a voluntary form of insurance that helps protect policyholders against risks related to health, accidents, and longevity…. Policies typically have long terms, spanning many years or even a lifetime.
When an event covered under the policy occurs, the insurer will pay benefits to the insured or the beneficiary in accordance with the agreed terms.
What is non-life insurance?
Non-life insurance is a voluntary form of insurance covering property damage, other losses, or civil liability towards third parties. Common products include health, accident, motor vehicle, property, cargo, and civil liability insurance.
Compared to life insurance, non-life insurance typically has a shorter term, commonly one year.
Differences between life insurance and non-life insurance
Key differences between life insurance and non-life insurance
Below is a comparison table of the differences between life insurance and non-life insurance [2]:
Criteria | Life insurance | Non-life insurance |
Insured object | People: life and health | People, property, civil liability |
Purpose | Protects against unforeseen risks related to health, the body, and life | Protects against unexpected risks to people, property, and civil liability |
Contract term | 10-20 years, even a lifetime | Much shorter, typically 1-2 years or less |
Premium payment method | Can be paid monthly, quarterly, semi-annually, or annually | Paid in a lump sum right after signing; if renewed in later years, premiums continue to be paid |
Payment principle | Paid at a pre-agreed fixed amount, independent of actual loss | Compensation based on the actual loss |
Factors affecting premium |
|
|
When payouts are made | When the risk actually occurs or when the contract matures | Only paid when a risk actually occurs |
Beneficiary | The policyholder or any individual designated in the contract | The party directly or indirectly affected by the incident |
Accumulation feature | Yes. When the contract matures, the participant receives back an accumulated amount comprising a share of the annual premiums paid plus interest/dividends and bonuses (if any) | No accumulation feature. Premiums paid are not refunded when the contract ends |
Below are four core differences.
Premium payment method
Life insurance: Paid periodically (monthly/quarterly/annually) throughout the policy term
Non-life insurance: Typically paid in a lump sum or in installments as agreed
Claim settlement principle
Life insurance: Pays the agreed sum insured as specified in the contract.
Non-life insurance: Indemnifies based on the actual loss incurred.
Beneficiary
Life insurance: Designated recipient of benefits, can be the policyholder or the insured
Non-life insurance: The party directly or indirectly exposed to risk, depending on the insurance type and policy terms
Benefit payout
Life insurance: Death, disability, critical illness, policy maturity
Non-life insurance: Indemnity for actual losses within policy limits
What do life insurance and non-life insurance have in common?
Although they differ in terms of the insured subject and scope of protection, life insurance and non-life insurance share several common characteristics:
Both are based on voluntary participation: Policyholders proactively select a product, enter into a contract, and fulfill their obligations as agreed with the insurance company.
Provide financial support when risks occur: Both types of insurance help reduce financial pressure when an insured event occurs, which may involve health, life, property, or liabilities arising from an incident.
Benefits are defined in the policy: The insurance contract specifies key terms, including the insured subject and scope of coverage, premium, policy term, payment conditions, and the rights and obligations of each party. These provisions serve as the basis for determining the policyholder's benefits when an insured event occurs.
Types of life insurance and non-life insurance
Category | Common types |
Life insurance | Pure endowment insurance / survival insurance Term insurance Endowment insurance Whole life insurance Annuity insurance |
Non-life insurance | Property Insurance Motor Insurance Marine & Cargo Engineering Insurance Liability Insurance Health & Personal Accident |
What are the advantages of life insurance and non-life insurance?
Each type of insurance has a different scope and purpose of protection. Therefore, the advantages of life insurance and non-life insurance are reflected in different aspects.
Advantages of life insurance
Combining protection and wealth accumulation: Some life insurance products provide protection benefits against risks to life and health, while also offering a wealth accumulation component.
Supporting financial planning: Life insurance helps policyholders plan their long-term financial future.
Building a saving habit: Maintaining a policy and making regular premium payments encourages policyholders to set aside a portion of their income for future financial goals.
Protecting health and finances: Depending on the product, life insurance can offer benefits if the insured faces risks such as critical illness, accidents, disability, or death. The policy payout helps cushion the insured and their family against the financial impact of these events.
Fully inheriting and expanding upon these core benefits, Cathay Life Vietnam (with more than 18 years of experience, over 120 offices serving more than 500,000 customers) provides a comprehensive life insurance ecosystem based on the DRCS model:
Lifelong Protection Solutions (DRCS Model): Addressing practical needs across various life stages, focusing on 4 key pillars: protection against mortality risk (Die), financial security for retirement (Retire), educational savings for children (Child), and health protection against illness and accidents (Sick).
Diverse Product Portfolio: Offering a wide range of choices from traditional endowment insurance and investment-linked plans (universal life) to annuity/savings products, as well as riders for health, accident, and term coverage
Modern Digitalized Experience: Over 95% to 99.9% of policy underwriting and claims are processed through digital tools, enabling customers to easily enroll online, manage policies, and track benefits transparently
Advantages of non-life insurance
Product diversity: Non-life insurance offers a wide range of product categories, including health, accident, motor vehicle, property, cargo transport, and travel insurance. Policyholders can select products tailored to the specific subject matter requiring protection.
Broad coverage scope: Non-life insurance covers a variety of subjects, such as individuals and physical assets, depending on the specific product and contract terms.
Financial loss compensation: Upon the occurrence of an insured event, non-life insurance compensates for actual losses in accordance with contract provisions, thereby mitigating the financial impact of the risk.
Building upon these outstanding advantages, Cathay Insurance Vietnam – with 15 years of experience serving over 1.8 million customers – offers a comprehensive non-life insurance ecosystem for both individuals and businesses.
In the individual segment, Cathay Insurance Vietnam stands out with health and accident insurance packages tailored to specific life stages, such as Youth Empowerment (Tiếp Sức Thanh Xuân), Family Shield (Bảo Vệ Tổ Ấm), Filial Care (Phụng Dưỡng Cha Mẹ), and Healthy Pregnancy (Mẹ Bầu Vui Khỏe), alongside essential property protection products including auto, motorcycle, home, and travel insurance.
For corporate clients, the company delivers optimal risk management solutions through property, engineering/construction, liability, and cargo insurance.
Since August 2026, the company’s omnichannel Customer Care Center has been operating, enabling customers to conveniently submit claims, receive product consultations, and provide feedback in a timely manner
Should you buy life insurance or non-life insurance?
Choosing between life and non-life insurance depends entirely on an individual’s specific protection needs and actual financial capacity.
Priority order when considering coverage:
Priority 1 – Mandatory & essential insurance: Start with legally required products (e.g., compulsory civil liability insurance for motor vehicle owners).
Priority 2 – Long-term financial protection: Consider life insurance if you want to build long-term protection for your income and health, as well as for your family.
These two types of insurance are not mutually exclusive. Policyholders can combine life and non-life insurance to comprehensively meet their protection needs.
Things to keep in mind when purchasing insurance
Before signing the contract
Carefully read core terms: Thoroughly review benefits, coverage scope, and exclusion clauses (the decisive factor in whether you will be paid the insurance money or not).
Evaluate the insurance company: Review operating history, financial capacity, and customer service quality.
Balance finances: Choose a product that meets protection needs and ensure premium levels suit long-term income, avoiding mid-term contract cancellation.
When signing the contract
Check detailed information: Review all rights, obligations, term duration, and exclusion clauses before putting pen to paper.
Declare truthfully: Provide accurate, full personal and health information; misdeclaration will lead to the risk of claim rejection.
After the contract takes effect
Pay premiums on time: Ensure continuous contract maintenance to preserve coverage validity.
Periodically review: Re-check the contract when there are changes in life needs or financial capacity for timely adjustments.
Life and non-life insurance segment of Cathay Financial Group
Cathay Financial Group is one of the leading financial institutions in the Asia-Pacific region, with strong operations in insurance, banking, and securities. In Vietnam, the Group is present through three member entities: Cathay Life Vietnam, Cathay Insurance Vietnam, and Cathay United Bank – Ho Chi Minh City Branch.
The life and non-life insurance segment of Cathay Financial Group focuses on risk management, protection, and customer care. From health, accident, and education insurance to property insurance, Cathay Financial Group introduces a diverse range of products tailored to the different needs of individuals and businesses. In Vietnam, Cathay Life Vietnam and Cathay Insurance Vietnam have built extensive networks, contributing to a rich and modern selection in the insurance sector.
Conclusion
Understanding the differences between life insurance and non-life insurance helps policyholders choose products that align with their protection needs and financial plans. The two types are not mutually exclusive and can be combined to address needs ranging from long-term protection to short-term risk management.
References
[1] Luat Kinh doanh bao hiem 2022. (n.d.). Thuvienphapluat.Vn. https://thuvienphapluat.vn/van-ban/Bao-hiem/Luat-Kinh-doanh-bao-hiem-2022-465916.aspx
[2] VnExpress. (2022, June 3). Phan biet bao hiem nhan tho va phi nhan tho. Vnexpress.Net; Bao VnExpress. https://vnexpress.net/phan-biet-bao-hiem-nhan-tho-va-phi-nhan-tho-4471851.html
[3] Cong Thong tin dien tu Chinh phu. (2022). Luat so 24/2000/QH10 cua Quoc hoi: Kinh doanh Bao hiem. Chinhphu.Vn. https://vanban.chinhphu.vn/?pageid=27160&docid=80498
[4] Cong Thong tin dien tu Chinh phu. (2022). Luat so 08/2022/QH15 cua Quoc hoi: Luat kinh doanh bao hiem. Chinhphu.Vn. https://vanban.chinhphu.vn/?pageid=27160&docid=206242
[5] Cathay Life. (2026). Cathay Life. https://www.cathaylife.com.vn/cathay/about