Key Differences between – Life Insurance and Health Insurance

Life Insurance and Health Insurance

Planning for the future is something that everyone should focus on. Whether it is a career-driven goal or a personal one that you are striving for, it is important to have a plan that will help in achieving them. The same also applies when it comes to establishing financial safety. Life can be unpredictable, which means that no one knows what problems lie ahead. However, not having an adequate financial cover will only be adding to the burden of facing the problem. This is why it is advisable to get covered under insurance so as to not be worried about finances.

There is a lot of debate as to which insurance policies should one go for. Now, you might have heard of the common terms “life insurance” and “health insurance”. Before considering any of these policies, it is essential to be aware of the key differences between the two. In order to do that, let’s take a look at what each one is before understanding how these policies differ from one another.

What is life insurance?

A life insurance policy provides financial security for the policyholder’s family in case they pass away. This policy can ensure that the policyholder’s family can continue with their lifestyle without any financial hassles. The death benefits of life insuranceplans are tax-free. This means that the nominee mentioned in the policy gets the entire sum assured.

Types of life insurance policies

Different life insurance policies that you can choose from include endowment plans, term insurance plans, whole life insurance plans, Unit-linked insurance plans (ULIPs), and annuity plans. Before choosing a plan, it is advisable to use a life insurance premium calculatorto find a plan that has affordable premiums.

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What is health insurance?

A health insurance policy provides financial coverage for the policyholder’s medical needs. Depending on the insurance policy chosen, the policyholder can either pay the medical expenses from their own pocket and then get reimbursed or have the insurance company directly take care of the medical expenses.

Types of health insurance policies

There are various types of health insurance plans that you can buy. These include individual health insurance plans, family health insurance plans, health insurance for senior citizens plans, critical illness insurance plans, personal accident insurance plans, etc.

What is the difference between a life insurance plan and a health insurance plan?

Now that you are thorough with these policies, read on to learn some of the key differences between the two:

  • Coverage

A life insurance plan offers comprehensive coverage. This means that this policy offers complete insurance cover, not limiting the policyholder to a certain limit of expense. This cover is provided in the event of the policyholder’s demise, and the sum assured which is mentioned in the policy agreement is given to the nominee of the policy. A health insurance plan on the other hand provides coverage for the policyholder’s hospital, medical, or surgical expenses when required. The sum given by the insurance company is based on the expenses and not pre-defined.

  • Tenure

A life insurance policy is a long-term plan which may or may not have to be renewed periodically. It either ends on completing maturity or in case of the policyholder’s demise. On the other hand, a health insurance policy is a short-term plan that ends upon completion of the policy tenure. This policy usually needs to be renewed on a yearly basis.

  • Premium
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The premium of a life insurance policy can be both fixed and flexible, depending on the type of policy chosen. Policyholders have the option of choosing life insurance plans that are investment-linked while offering insurance features. The premiums of a health insurance plan depend on factors such as the policyholder’s health and age. Health insurance plans do not include any investment component and are only focused on offering insurance features.

  • Death benefit

Depending on the policy chosen, life insurance plans can offer both deaths as well as survival benefits. However, a health insurance plan does not include any death or survival benefit, as it is only meant to provide financial coverage for the policyholder’s medical needs.

To sum up, both these policies are important to financially secure you and your family. While a health insurance policy helps in covering medical expenses, a life insurance policy can financially cover your family in case of your demise.

Also Read: Things to keep in mind while applying for a personal loan in Singapore

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