Key Differences Between Life Insurance And Health Insurance
Key Differences Between Life Insurance And Health Insurance
As the cost of living gradually increases over time, dealing with the expense of emergencies merely on savings is not enough. Having reliable sources of monetary assistance is necessary. An insurance policy is one of them. Among the different types of policies available, life insurance plans and health insurance plans are most common. Keep reading to know the difference between the two to get a better understanding.
What is life insurance?
A life insurance policy is an agreement between the insurer and the policyholder, whereupon the insurer agrees to compensate the dependents of the policyholder. This compensation is given in the event of the policyholder’s unfortunate demise. However, there are other benefits of life insurance as well. Some policies allow you to invest and gain good returns, thus allowing you to create wealth for your future.
Types of life plans
Listed below are a few types of life plans:
1. Term insurance
As the name suggests, the insured gets financial protection for a specified term. For example, if the term of the policy is 20 years, the policyholder and their family would be covered by the policy for 20 years. The life cover ends once the policy matures. If the policyholder was to pass away during the term of the policy, the insurer will compensate their family.
2. Unit-linked Insurance Plan (ULIP)
A ULIP is a policy in which the policyholder gets the dual benefits of investment and insurance. The premium that you pay for the policy is used for both these purposes. This policy is aimed at those who want to increase their wealth to achieve life goals but at the same time, also want to leave a corpus for their future generations. The policyholder and their family get life protection cover from life risks. If an unfortunate circumstance were to happen, the nominee can claim the sum assured amount.
3. Endowment plan
Endowment plans are similar to ULIPs, in which they provide a corpus to fulfil your dreams, if you were to survive the policy duration. These policies can also act as a savings plan. The returns in endowment plans tend to be guaranteed. Whereas in ULIPs, the returns are subject to market risks and the amount you receive is not predetermined.
What is health insurance?
A health insurance policy helps you in taking care of the medical costs of your treatment as well as those of your loved ones. Health insurance can be taken for an individual as well as for the dependents. It can cover a range of healthcare costs such as surgery, hospitalisation, room charges, medicines, and more. This policy helps in safeguarding your savings against expenses related to health emergency.
Types of health plans
Listed below are a few types of health plans:
1. Individual health insurance
An individual health insurance is a type of policy that covers a single person. It provides financial coverage from various illnesses, accidents, and hospitalisation expenses.
2. Family health insurance
A family health insurance is a type of policy designed to cover the a primary policyholder as well as their dependents, i.e., their family members, under one single premium. The same policy protects and covers all family members against various illnesses, accidents, and hospitalisation.
3. Senior citizens’ health insurance
As the name suggests, senior citizens health insurance is a type of health insurance policy designed for people over 60 years of age. As the ailments and requirements change with old age, the policy helps in covering its expenses.
Differences between the two
Given below are the key differences between life insurance and health insurance.
Life Insurance Health Insurance
Designed to financially protect your loved ones against any unfortunate circumstances Designed to financially assist you solely with the cost of medical emergencies
Come with a specific tenure and do not require renewal of any kind Need to be renewed after a specific term for them to remain operational
Offers death benefit or maturity benefit, depending on the policyholder’s survival or demise Covers only the cost of medical treatment, with no death or maturity benefit offered under it
Premium could either be fixed or flexible Premium is generally fixed
Conclusion
These are the differences between life insurance and health insurance. You can use the life insurance premium calculator to get an idea about the cost of your plan based on your requirement. Similarly, health insurance calculators are also available online for you to get premium cost estimates.
