Do you believe in planning for the future? If yes, purchasing Life and Health Insurance policies should be your next move. Let’s understand everything about these policies. There are major differences between life insurance and health insurance.

Difference between life insurance and health insurance:

Life insurance vs health insurance is best seen on a table as follows:

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.

Term Insurance Premium

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 type of 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.

FAQ’s :

Many people do not fully understand what life insurance is and how it works. This is partly because life insurance is somewhat complex, and partly because it is a very flexible type of insurance that offers many opportunities for creating security for you and for your family.

The two basic types of life insurance are:

  • Term life insurance: A term life policy is in force for a specific time and has a face value (coverage amount) that you specify when you buy the policy. In the event that you die within the specified term, the insurance company pays the face value of the policy as a death benefit to your beneficiaries.
  • Permanent life insurance: A permanent life insurance policy (which includes whole life, universal life and variable life insurance) is in force for your lifetime as long as you continue to make your premium payments. Like term life insurance, permanent life insurance pays a death benefit. But it also has an accumulating cash value.

To get a complete understanding of your options and evaluate quotes, contact a local independent agent in our network who specializes in life insurance.

Our member agents work for you, the customer, not for a life insurance company. Your agent will be able to provide options and quotes from multiple insurance companies and help you to make an informed decision about the right life insurance for you.

In its basic form, a life insurance policy provides death benefits and is designed to cover loss of income, end-of-life expenses, funeral costs and other financial needs that a family may have if you – the policyholder – should die unexpectedly.

While death benefits are often kept for funeral expenses and income replacement, life insurance is a very flexible type of coverage that can be used in a number of ways.
Life insurance can be customized to your specific needs, taking into account your family’s financial picture and your future financial security. The amount of life insurance you need depends on your goals, your family, and the expenses you want your family to be able to cover once you are no longer there to support them.
The bond signed between the policy holder and the insurance company. The amount is decided by the holder of the policy and the premiums are paid to the company on a monthly, half yearly or yearly basis.

Should the policyholder die while a life insurance policy is in force, then the life insurance company will pay out the death benefits specified in the policy. Additionally (applicable to permanent life insurance policies only), the insurance company will accumulate a cash value. Death payouts are paid as a lump sum to the named beneficiary (the person who will receive the life insurance benefits), as mentioned in the policy.
The answer to this question totally depends on what you are looking for and it also depends on your age, your health conditions and your affordability factor.
Life insurance proceeds are usually not taxable. The life insurance pay out may become taxable, however, if you name your estate as the beneficiary. At that point, the payouts become a part of your estate, and can be subject to estate taxes.
Each insurance is of a different type and covers different aspects of your life. Life insurance is a pay out to your beneficiaries in the case of your premature death. Health insurance, on the other hand, helps pay for medical expenses such as doctor's visits, hospital stays, medications, tests, and procedures. This helps ensure that people can afford their medical expenses and stay healthy.
Most insurance companies say that a reasonable amount for life insurance is six to 10 times the amount of your annual salary.
If you stop paying premiums, your coverage lapses. All your investment will be for no gain.
If you happen to outlive the maturity date of your policy, the company pays you back the total sum assured.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time’

The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale

Consult with your financial advisor before making any decisions on insurance purchase.

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