What is the Difference between Life Insurance and Health Insurance?

  • July 02, 2024
  • Dushyant Sharma
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For those who care about the well-being of their family, both life insurance and health insurance are necessary. Life can throw a curveball when you least expect it, this is why you need a safety net. This safety net can be provided by life insurance and health insurance.

 

While life insurance ensures that an individual’s family will continue to get financial support after his/her demise, health insurance ensures that an individual is not financially affected during a medical emergency. 

 

In this article, we will understand what the difference between life and health insurance is.

What is Life Insurance?

A life insurance policy refers to a financial agreement between an insurance company and the policyholder. As a part of this agreement, a lump sum death benefit is provided to the family in the unfortunate event of the policyholder’s demise while the policy is active.

 

This kind of policy must be owned by every individual. However, it is particularly beneficial for those individuals who are the primary breadwinners of their family as their absence could turn the life of their dependents upside-down. When the dependents are in emotional distress and need time to heal emotionally and mentally, they certainly do not deserve to be financially stressed. It is an extremely tough situation and no individual would wish their family to go through it.

 

The financial assistance provided by a life insurance policyholder could help the family to clear off their debts, accomplish future goals which require finances such as marriage and education, manage day-to-day expenses, and so on. 

 

The insurance seekers have an option to strengthen their basic cover with add-on options which cover accidental disability, critical illness, etc. Certain types of life insurance policies also offer investment and saving benefits along with life coverage. Nowadays, you can purchase life insurance policies online. You can do market research on different policies available in the Indian insurance market, and choose one which meets your financial requirements and fits your budget.

What is Health Insurance?

Regardless of how trite this phrase is, it is a well-known fact that life is unpredictable. However, it is possible for the individuals to get protection against certain unforeseeable circumstances. Health insurance takes care of one essential aspect. 

 

We’re in an era where the medical and hospitalization bills are heavy on the pocket. However, having a health insurance policy compensates for the healthcare services which need to be availed by us. For this service, the policyholder has to pay a premium to the insurance company. The premiums are negligible compared to the cost of seeking medical treatment, especially when we talk about critical illnesses. 

 

The medical and hospitalization costs can significantly drain your savings if you do not have a health insurance policy. Hence, individuals must invest in critical illness insurance for comprehensive protection. Before opting for health insurance, an individual must know that the policy will only cover healthcare for as long as the premiums are paid. In case of death, no additional benefits are paid out. Based on the terms outlined in the health insurance policy, all the eligible medical expenses will be compensated.

How do life insurance and health insurance differ from each other?

The table mentioned below shows the distinction between life insurance and health insurance.

Life Insurance

Health Insurance

Life Insurance Policy is a life-time comprehensive coverage which offers complete insurance. 


According to the policy, a death benefit is paid to the nominee/beneficiary upon the unfortunate event of the policyholder’s demise.

Health insurance provides medical coverage and covers health needs of the policyholder. 


No death benefit is applicable in case of health insurance.

The premiums of a life insurance policy are either fixed or flexible, depending on the type of life insurance policy. 


Life insurance plans with the option of investment plans are also available, for example Unit-Linked Insurance Plan (ULIP).

Only a fixed premium is available under a health insurance policy. The objective of this plan is medical and health protection only. Hence, there is no option of investment. 


We can say that health is the only investment offered by a health insurance policy.

It is a long-term policy/plan.

It is a short-term policy/plan.

Life insurance generally comes with a fixed tenure and is terminated once this insurance’s tenure is over.

Health insurance does not have a fixed tenure. The policy needs to be renewed by the insured annually, under normal circumstances, to continue to avail the protection coverage offered by the health insurance policy.

Life insurance’s financial protection for the family and dependents comes after the unfortunate event of the policyholder’s demise.

Health insurance covers you and your family, and takes care of your medical expenses incurred during your life.

This policy provides both survival as well as death benefits at the insurance term’s end.

Although no survival or death benefit is offered by the health insurance policy, it takes care of your medical needs and hospitalization.

Conclusion

Both life insurance and health insurance policies have their advantages and limitations. Both these policies must be taken by an individual who cares about his well-being as well as his dependents’. There are different kinds of life insurance and health insurance policies, and it is recommended to get in touch with an insurance agent or an insurance broker for professional advice regarding the best life insurance and health insurance plans based on your needs and budget.


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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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