| Life insurance | Health insurance |
|---|---|
| It is a life time comprehensive coverage that offers complete insurance. It pays out to your beneficiary at the point of the policy holder’s death. | These are medical coverage and covers health needs. It does not cover anything other than medical expenses. |
| Fixed and flexible premiums available depending on the choice of policy. Investment plans are also available. | Only fixed premium available. Investment is not the concern here. Medical & Health protection is the motive of this plan. No claim bonus can be claimed here. |
| It is a long-term plan. | It is a short-term plan. |
| Life insurance is generally for a fixed tenure. It normally is terminated once the tenure of the Insurance is over. | The tenure of this kind of insurance is not fixed. Under normal circumstance, the insured renews the policy annually so he/she can continue to have the protection coverage it offers. |
| It is for a fixed tenure and it normally gets over with the expiry of the policy. | The policy holder usually renews the policy annually and hence enjoys the health protection continuously. |
| The protection of the family and the dependants financially comes at the time of the demise of the policy holder. | This covers you and your family and takes care of your medical expenses during your life. |
| This provides both survival and death benefits at the end of the insurance term. | No survival and death benefits here but it looks after your medical needs and hospitalization. |
What is Life Insurance?
The contractual agreement between a policy holder and the insurance company that promises to give the amount insured to the bereaved family after the demise of the policy holder.
There is no taxation on the amount received during the compensation to the beneficiary. Hence the total amount reaches the family without any deductions. Life Insurance is a cover for the entire family’s financial needs and future plans or investments.
Types of Life Insurance :
- Type 1 : The Whole Life Insurance has fixed premium payouts and the sum assured to the beneficiary are generally tax free and fixed. It is a cheaper insurance compared to the Universal Life Insurance taking into consideration the low risk approach. A loan can be taken against this kind of policy.
- Type 2 : The Universal Life Insurance can also be called as an investment policy which even provides the investor a death benefit. With flexible premiums premium payouts, some parts of it are re-invested to add more cash value to the sum assured. Unlike the Whole Life Insurance, ULI is more expensive because of higher returns and has risk factors involved. Hence the premiums here are flexible and also offer flexible death benefits.
What is Health Insurance?
Health insurance comes to your rescue only when you have health issues, need of medical assistance and hospitalization. The policy holder pays a fixed premium for their health protection. Here you get your medical expenses reimbursed by your insurance company after paying for the same yourself or the company takes care of the expenses directly with the hospital or facility that has treated you. These depend on the policy you have choosen as your health insurance plan.
Types of Health Insurance :
- Type 1 : Individual Health Insurance – An Individual Health Insurance is for an individual as the name suggests. It is used to financially cover the expenses like illnesses, accidents, hospitalization and medical emergencies that may occur during one’s lifetime.
Moreover, maternity benefits, OPD expenses, critical illness cover are all provided by individual health insurance. - Type 2 : Family Floater Health Insurance – This types of health insurance plan covers all household members against one premium. It covers illnesses, accidents, hospitalization and other medical expenses that may arise during our lifetime.
- Type 3 : Senior Citizens Health Insurance – These are for those above the 60 years mark. Hence the name – “Senior Citizens”. This is custom made keeping in mind the various physical and psychological needs of a 60 year plus citizen. It involves domiciliary care, organ donation expenses and critical illnesses.
Above were the general differences between life insurance and health insurance.
Life Insurance vs Health Insurance :
Difference between health & life insurance is best seen as follows :
As mentioned above, health insurance tend to your medical expenses while you are still alive while the life insurance helps your family financially in case of your untimely demise.
Below are the key differences between Life Insurance and a Health Insurance policies:
| Feature | Life insurance | Health insurance |
|---|---|---|
| Why should you invest in this? | Your family is financially secured in case of your sudden death. | Medical expenses are skyrocketing and with a health cover you need not dig deep into your pocket for any medical emergencies. |
| Core benefit | The sum promised is paid to the beneficiary of the demised. | All your treatment expenses are covered subject to maximum coverage amount and other conditions. |
| Additional Benefits | Many benefits can be added on top of the cover policy. For example, maturity benefits, surrender benefits, loyalty additions etc. | Some policies offer free health check-ups. No claim bonus can be added in terms of some policies. |
| Types of covers | 1. Individual Cover 2. Group Cover |
1. Individual 2. Family 3. Group coverage |
| Types of Plans | Term plans, Savings, child-related (wealth creation), Retirement, etc. | Comprehensive health insurance plans, critical illness cover, etc. |
| Tax Benefits | Under Section 80C, Section 10(10D) of the Income Tax Act | Under Section 80D of the Income Tax Act |
In your financial portfolio, Life Insurance and Health Insurance are distinct elements. An informed decision taking into consideration your requirements will help you realize their individual potentials. In this article you will be very clear about the difference between health and life insurance.
Benefits of Life and Health Insurance :
There are innumerable benefits of life insurance and health insurance. Let’s have a look at their benefits through their plans individually.
Benefits of Life Insurance Plans :
- Financial security and protection are the two most important benefits of Life Insurance.
- Payouts are generally tax-free.
- A guaranteed death benefit.
- With life insurance comes Tax benefit However, Tax savings should not be the reason for buying a term policy. This policy offers tax benefits and exemptions as per prevailing tax laws.
Life Insurance and Health Insurance is for everyone who are worried about the future, for family and for the ones who care. Health insurance gets your medical affairs covered and Life insurance gets your family covered in your absence.
Life is uncertain, it is better to protect yourself and your loved ones before it’s too late. Both these insurance policies are crucial for each one of us. What you pick is now your personal choice.
