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Exploring the Differences Between Health Insurance and Life Insurance

Published On Jan 15, 2021 5:30 AM By Gunjan Anand

The primary goal behind preferring life insurance is to provide the policyholder with life cover. The policyholder wants to ensure that, in his/her absence, his/her family/dependents can maintain their lifestyle. The objective of health insurance policies is to cover the actual cost of treating diseases/medical conditions subject to the sum assured. There is no cover for life, which means that there is no payout for death.

Exploring the Differences Between Health Insurance and Life Insurance

Difference Between Life Insurance and Health Insurance

Both life insurance and health insurance are unique elements that protect various categories of financial risks. Let's look at some of the main distinctions between life insurance and health insurance.

  Life Insurance Health Insurance
Type Life insurance is a comprehensive cover that provides you with full insurance throughout your lifespan, not restricted to a certain expense. In the event of the insured's demise, the sum assured goes to the beneficiary. Health insurance is typically limited to contributing to the needs of the hospital/medical/surgical, offering only a medical emergency cover as and when needed. It does not go beyond taking care of the medical costs.
Premium Depending on the life insurance type chosen, the premiums are both fixed and flexible. For higher cash benefits, some life insurance contracts often come with potential investment value policies. Mostly the premiums are fixed. Health insurance offers coverage to cope with medical emergency expenses. Investment is not the motive of these policies, but protection is.
Tenure Life insurance is for a fixed term and is usually terminated after the tenure of the insurance has expired. The duration of this health insurance is not set. In normal circumstances, the insured periodically renew the insurance so that he/she can continue to have the coverage the plan provides.
Benefit In the event of the insured's demise, life insurance primarily protects the beneficiary/nominee/ family financially. To prevent any unfortunate eventuality like loss of life owing to financial constraints, health insurance is the protection cover for oneself as well as the family.
Survival and Death Benefits Life insurance provides both survivals as well as death benefits at the end of the term of insurance, dependent on the insurance policies you select. There is no survival or death benefit from health insurance, it only caters to your prevailing medical requirements and treatment. No Claim Bonus can be added in the case of some policy types. Few health insurance companies offer free health check-ups.
Reimbursement In certain cases, the money you invest comes back to you upon maturity, by paying a little extra premium, in case you outlive the term of the policy. This amount is tax-free At the end of the policy period, no money is refunded. The money comes back only as reimbursement for the expenditures you paid for your sickness or some other medical cost during the term.

Bottom Line

You must first know what life insurance and health insurance are, to make an informed decision. It is wise to opt for both, given the multiple benefits of life insurance and health insurance. Health insurance and life insurance is financial must-have. When you evaluate your health status, age, responsibilities, occupation, and other factors, it becomes easier to choose an appropriate cover for both.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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