Planning for your future should be a priority. Right from the time you start to earn, we always strive to create a buffer income. With respect to securing your future, two common and widely used financial instruments are life insurance and health insurance policies.
While both have different objectives, they form a crucial part of your financial plan. Let us look at the difference life insurance vs health insurance. But before that, let us understand what they stand for.
What is the purpose of life insurance?
Life insurance policies aim at providing financial security to your dependents in your absence. By availing a life insurance cover, the policyholder can make sure the lifestyle of his dependents is not much affected due to financial hassles. The proceeds from life insurance policy allow the family to replace the income of the deceased individual, helping restore financial normalcy in their lives. Also, the death benefits for most types of plans are tax-free; therefore, the entire sum assured reaches the beneficiaries.
What is the purpose of health insurance?
Unlike life insurance plans, a health insurance policy provides payout for availing medical treatment. It is a contract to provide a financial safety net to the insured in times of medical emergencies.
In the absence of a medical insurance
plan, you will need to bear the medical costs in such a situation. However, if you have a health insurance, these costs can be either reimbursed or settled by cashless mode depending on your insurance policy and the medical facility where treatment is sought. Further, when you buy health insurance policy, some plans also have the facility for a preventive health check-up. These policies make available a medical check-up facility for the insured while some other policies cover the cost of prescription medicines too.
Life insurance vs health insurance:
|Life insurance is that policy which offers a financial cover to your family in case of your untimely demise. The sum-assured, or the money paid to your nominees is pre-defined basis the policy agreement.
||Health insurance, on the other hand, is a financial cover for your medical expenses. This policy can cover the costs of treatment, hospitalisation and other ancillary expenses in case of any ailment or accident.
|The premiums for a life insurance plan can depend on the type of policy purchased and age of the policyholder. Some life insurance policies also offer an investment component along with insurance features.
||The health insurance premium for a health insurance policy are decided basis age and health of a policyholder. The objective of a health insurance policy is to provide protection and not investment. Thus all the health insurance policies have insurance features only.
|It is a long-term insurance product, which may or may not require timely renewals.
||It is a short-term insurance product that typically needs to be renewed once a year.
|The policy terminates on the demise of the insured or completion of the insurance period.
||Health policies expire on completion of the policy tenure.
|Primarily life insurance offers death benefits, but survival benefits are also available under a life insurance policy.
||Health insurance exclusively caters to your future medical needs. It offers neither survival nor death benefits to the insured.
These are some of the notable differences between life insurance vs health insurance. If you are worried about selecting, both policies are equally important and must form part of your financial plan; one to cover expenses while you are alive and others to take care of your loved ones after you are gone. Explore the various types of health insurance plans
in India offered by Bajaj Allianz Blogs.