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c. Fidelity Guarantee Insurance
Employees or workers make mistake knowingly or unknowingly which causes loss
to the organization. Sometimes the employees may do frauds, embezzlement and theft in
the organization. So, to compensate the loss of organization, a policy is issued known as
Fidelity Guarantee Insurance.

Key Point The insurance which compensates the financial loss caused to the
organization due to embezzlement,, theft frauds or dishonesty committed
by an employee is known as fidelity guarantee insurance.

d. Aviation Insurance
The insurance, which is made to compensate the
loss incurred by aviation risks and accidents, is known
as aviation insurance. The insurance provides financial
security to the body of aircraft cargo, passengers as
well as third party. Aeroplane crash

Key Point The insurance which covers the risk of aviation and provides financial
compensation in care of loss of aircraft, cargo and death of passenger is
known as aviation insurance.

Differences Between Life Insurance and Non-life Insurance

Basis Life Insurance Non-life Insurance
a. Meaning The insurance of human being is The insurance of physical properties is
called life insurance. called non-life insurance.
b. Subject matter A life is the subject matter for the Properties or goods are the subject
insurance. matter of insurance.
c. Policy period Generally, life insurance is a long It is a short term contract which is
tern contract like 10 years, 15 taken normally for one year and can be
years, 20 years and so on. renewed.
d. Expense Generally, the premium of life Generally, the premium of non-life
insurance is personal expense and insurance is paid by the business
is paid by an individual. organization.
e. Compensation Insurance company pays the The sum of money is to be compensated
holder predetermined sum of money to the to the owner of goods or properties
insured on the expiry of the policy or against the losses of properties.
to the nominee after the death of the
insured.
f. Indemnity It is not the contract of indemnity It is the contract of indemnity under
because the life of human being can which the loss of properties is
not be indemnified in money’s worth. indemnified in money’s worth.

92 Aakar’s Office Practice and Accountancy - 10 Financial Institutions 93