Difference Between Life Insurance and Health Insurance: Are They Important?

Difference Between Life Insurance and Health Insurance: Are They Important?

Bajaj Finserv Health
November 17, 20215 mins read

Key Takeaways

  • Health insurance plans help manage planned and unexpected medical needs
  • Understand the difference between life insurance and health insurance
  • Compare health insurance plans available in the market before signing up

Having an investment strategy is essential for a financially secure future. Two of the most popular forms of investing are life insurance and health insurance. Life insurance pledges to support your family in your absence and may give you returns on your investment. On the other hand, health insurance takes care of the medical needs of your family and yourself. With both of them by your side, you can see that emergencies do not affect your standard of living .

When planning all this, understanding the difference between life insurance and health insurance is extremely important. This helps you select plans that best suit your requirements. Read on for an in-depth look at life insurance and health insurance.

What is life insurance?

Life insurance takes care of the financial requirements of your family in your absence. It provides financial benefits to the nominee in case of an unfortunate event like demise. Here, the beneficiary gets monetary benefits in return of the premiums paid regularly by the policyholder. This lump sum amount paid to the nominee is a pre-determined amount. If you are availing a life insurance policy, death benefits are tax-free. Therefore, your family gets the pre-fixed amount without any major deductions.

Under life insurance, there are two main categories:

  • Universal life insurance
  • Whole life insurance 

Here are a few common features of a universal life insurance policy.

  • It is an investment policy that comes along with nominee and death benefits
  • It has flexible premium payouts
  • Part of the premium payment can be invested to increase the sum assured value
  • It is an expensive policy
  • It provides flexible death benefits

Here are some usual features of a whole life insurance policy.

  • It is available with fixed premium payouts
  • It offers sum assured to the nominee
  • The sum assured is a fixed amount and tax-free
  • It is less expensive when compared to universal policy
  • It is no-risk or low-risk policy
  • Loan can be availed against this policy

Additional read: What is Sum Assured: What is its Importance in a Life Insurance Policy?

how to choose a insurance policy

What is health insurance?

Health insurance provides financial cover to manage your medical needs. It can be used for both planned expenses and emergency treatment. The policyholder pays a fixed premium to the insurance provider based on the chosen plan. By investing in a health insurance policy, you can get your medical expenses reimbursed or the company directly settles the bill with the hospital via cashless claims. Therefore, it is vital that you compare health insurance plans before finalizing the one best suited to meet your medical requirements.

There are three major types of health insurance plans:

In individual health insurance plans, you get comprehensive coverage benefits like hospitalization expenses, critical illness cover and more. They are applicable for a single person only. However, you can add your immediate family members by paying additional premiums. You can also take an individual children health insurance plan to meet the medical expenses of your dependent children. These plans are tailor-made to meet your requirements.

A senior citizens health insurance plan is a policy applicable for people above 60 years of age. This plan is customized to the different psychological and physical requirements of senior citizens.

A family floater plan is a cover that you can avail for your entire family by paying a single premium. This includes seniors and kids. The whole family can utilize all the medical benefits as mentioned in the policy.

Life insurance vs health insurance: What is the difference?

See the table below to understand the major differences between the two.

A cover that provides monetary benefits to the beneficiary in the event of the death of the policyholder A cover designed to meet your medical requirements
Both fixed and flexible premiums are availableOnly fixed premiums are available
It is a long-term planIt is a short-term plan
It can be availed for a fixed tenureNo fixed tenure available for it
You get sum assured at the end of policy term in case nothing unfortunate happens You do not get any sum insured when the policy term is over

Additional read: Sum Insured and Sum Assured: How Are They Different From Each Other?

What are the benefits of health insurance over life insurance?

With a health insurance policy, you can avail a few unique benefits based on the policy you choose. Here are the most important ones.

  • Maternity benefits
  • Coverage of pre-hospitalization and post-hospitalization expenses
  • Coverage of home hospitalization expenses
  • Coverage for critical illnesses
  • Coverage of accidental hospitalization expenses
  • Coverage of lab tests, medication and medical equipment
  • Coverage of ambulance charges and doctor vosits
  • Doctor visits

The benefit of health insurance is that it allows you to pay for medical needs without financial strain. It does not offer any sum assured benefits to your beneficiaries unlike life insurance.

Now that you are aware of the difference between life insurance and health insurance, you can make smart investments to secure the future of your family. For meeting planned and unplanned medical expenses, you can consider investing in Aarogya Care Plans on Bajaj Finserv Health. With features like preventive health check-ups, network discounts and online doctor consultations, these health insurance plans provide comprehensive medical care on time. Avail these budget-friendly plans and march towards a healthy future!

Difference Between Life Insurance and Health Insurance: Are They Important? banner
  1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3093249/
  2. https://www.policyholder.gov.in/What_Life_Insurance_to_Buy.aspx

Please note that this article is solely meant for informational purposes and Bajaj Finserv Health Limited (“BFHL”) does not shoulder any responsibility of the views/advice/information expressed/given by the writer/reviewer/originator. This article should not be considered as a substitute for any medical advice, diagnosis or treatment. Always consult with your trusted physician/qualified healthcare professional to evaluate your medical condition. The above article has been reviewed by a qualified doctor and BFHL is not responsible for any damages for any information or services provided by any third party.

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