Difference between Life Insurance and Health Insurance – Know The Differences Before Your Pick!
The insurance market is huge in India because many people across the nation are secured with insurance policies. Everyone who believes in keeping their future secured purchases health and life insurance policies. But, many people are still not equipped with insurance policies as they are unaware of the difference between life insurance and health insurance. Continue reading to sharpen your knowledge and learn the differences.
What is a Life Insurance?
A life insurance policy is an agreement or a personal safety that prevents your family from financial burdens when you are not around to satisfy their needs. The bond or agreement between the insurance company and the insured person signifies that the insurance company will pay off the insurance amount to the nominee or beneficiary after the insured’s demise or after any unfortunate events. In general, the bond promises to provide financial support to the bereaved family after the dismissal of the policyholder. The financial benefits offered to the deceased family are tax-free; the sum assured is paid off to the family without tax deductions. The insurance policy offers coverage to the insured for their entire life. So, it is often referred to as the future full-proof saving plan for the family.
Types of Life Insurance!
There are two main types of life insurance:
- Whole Life Insurance – The policy comes with fixed premiums and offers a sum assured to nominees without tax deductions. It is a cost-effective policy because of its no-risk approach and consistency. Insured can also take a loan against the whole life insurance policy.
- Universal Life Insurance – The policy offers death benefits to the beneficiary, but it is often referred to as an investment plan. Premiums are flexible, and one part of the payment is used to add cash value to the sum assured. It is an expensive insurance policy because of the investments for higher returns, which can turn into a high risk later. Since the premiums are flexible, the death benefits offered are also flexible.
What is a Health Insurance?
Health insurance is the contract or bond between the insurance company and the insured to offer financial coverage during medical needs. Insured have to pay a fixed premium for health coverage during medical emergencies.
People covered with health insurance are often reimbursed for all medical expenses they pay during medical treatment, or the insurance company pays off the medical bills directly on behalf of the insured. It depends on the type of health insurance policy. Some plans also cover the bills of prescribed medicines.
Types of Health Insurance
There are three different types of health insurance.
- Individual Health Insurance – As the name suggests, it is a policy customized for a person to protect or cover them from different ailments, hospitalization expenses, accidents, and other medical emergencies which may arise anytime. It also offers additional benefits to the insured, including OPD expenses, Maternity Benefits, QYUSH, Critical Illness Coverage, and more.
- Family Floater Health Insurance – The policy is customized to provide coverage to an entire family with a single premium. The policy is designed to cover all family members under different accidents, illnesses, hospitalization, and other medical needs that may arise at any time.
- Senior Citizens Health Insurance – As the name goes, it is an insurance policy specifically designed for insured people above 60 years. The policy is customized according to seniors’ psychological and physical needs and provides additional benefits to the insured, like organ donation expenses, AYUSH, domiciliary care, critical care, and more.
Difference between Life Insurance and Health Insurance
|Life Insurance||Health Insurance|
|Life insurance is a comprehensive life policy covering the insured throughout their lifespan and is not limited to specific expenses. It provides death benefits to the beneficiary after the insured person’s unfortunate demise.||Health insurance is a policy catering to surgical/medical/hospital needs, offering coverage to an insured person during medical expenses. The policy will only cover medical expenses and never go beyond that.|
|Both flexible and fixed premiums are available depending upon the type of insurance policies. Some plans are offered with future investment value policies for the best cash value.||Most of the premiums are usually fixed. It offers coverage to pay off medical expenses during emergencies. It can be used as a protection plan but not as an investment.|
|Long-term policy||Short-term policy|
|Life insurance comes with fixed tenure and terminates after the tenure is over.||There is no fixed tenure in health insurance. The insured can renew the policy under certain conditions to continue enjoying the protection it delivers.|
|The policy mainly financially protects the nominee and family after the insured’s demise.||It provides financial protection to the insured against medical expenses and emergencies.|
|Depending upon the insurance policies, one can choose death and survival benefits at the termination of the policy.||There is no death or survival benefit as the policy only caters to the present medical emergencies and needs.|
|In some policies, the insured may pay extra premiums and enjoy survival benefits upon maturity of the policy, and all money is tax-free.||The insured will get no refund at the termination of the health insurance policy.|
Both health and life insurances are for all concerned about their future, family, and loved ones. In general, the main difference between life insurance and health insurance is that health insurance deals with all medical affairs. In contrast, life insurance makes your family financially secure when you are not around to look after their needs.
Life is uncertain, and it is always better to stay protected and covered with the best insurance policies before it gets late. Both health and life insurance policies are important for us. Since you are aware of the difference between life insurance and health insurance, it is completely your personal choice which one you choose.