Insurance is a contract in which a person or a company receives financial protection or reimbursement in the form of a policy from an insurance company. When it comes to obtaining insurance, many consumers are split between life insurance and health insurance. So, which one should you go with? – Is it life insurance that will ensure your family's financial security in the event of your death? Or health insurance, which will provide you with a solid financial back-up to cover medical expenses? You'll be able to figure it out if you understand the difference between health insurance and life insurance.
What is Life Insurance?
Life insurance is similar to a personal safety deposit box that your family may access if you are no longer alive to meet their requirements. It is a contract between the insured and the insurance company that, in the case of the insured's death, the life insurance for which they paid premiums bears fruit in the form of financial benefits to the beneficiary. In most circumstances, the death benefits are tax-free. As a result, the sum assured reaches the family without any significant deductions. Life insurance benefits provide coverage for your life. You might think of it as your family's future full-proof savings strategy.
What is Health Insurance?
Health insurance is a contract between the insured and the insurer that provides financial protection in a medical emergency. The insured pays a certain amount for their health insurance. If you have health insurance, you may either get reimbursed for out-of-pocket medical expenditures or have the insurance company pay for them directly on your behalf.
Life Insurance Vs. Health Insurance
Below are the five significant differences between medical insurance vs. life insurance:
Depending on the type of life insurance chosen, premiums are both fixed and changeable. Some life insurance policies also include future investment value policies, which can help you get a lucrative cash value. Health insurance rates, on the other hand, are almost always fixed. Health insurance pays for expenditures incurred in the event of a medical emergency. The goal of these programs is not to make money; it's to keep you safe.
A significant difference between health insurance and life insurance is that health insurance is a short-term plan, whereas life insurance is generally a long-term plan. However, life insurance category has short-term plan also.
Life insurance is typically for a set period. When the period of the insurance expires, it is usually terminated. The duration of health insurance is not set in stone. In most cases, the insured renews the policy to continue to benefit from the coverage it provides.
The primary purpose of life insurance is to provide financial security to your family in the case of the insured's death. Health insurance is a kind of security for oneself and one's family in the case of medical emergency.
Death and Survival Benefits
Another difference between medical insurance vs. life insurance is that in life insurance, you might get both survival and death benefits after the policy term depending on the type of life insurance you buy. Health insurance does not cover you in the event of your death.
Benefits of Life and Health Insurance
The two most essential term policy benefits of life insurance are financial stability and protection. The benefits are typically tax-free, and a death benefit is assured. Tax benefits and exemptions are available with life insurance, depending on the current tax rules, which are subject to change.
Health insurance term policy benefits cover unforeseen medical expenses. Because the payment is paid all at once, tax advantages are available for years of insurance coverage. If you choose Critical Illness Cover as an add-on or as part of your plan, it covers hospital expenditures in the event of a critical illness.
Life and health insurance are for anybody concerned about the future, their family, and those who care about them. Your medical expenses are covered by health insurance, and your family is protected by life insurance in case of an untimely death. Because life is unpredictable, it is preferable to safeguard yourself and others before it is too late. Both of these policies are essential for everyone.
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.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.