Health insurance protects you from financial problems stemming from medical costs when you become ill. Meanwhile, life insurance primarily provides your loved ones a cash benefit upon your death.
Life insurance and health insurance: Can you tell the difference?
You may be wondering if the time is right to get an insurance plan, especially after recent global events. With the possibility of similar events happening again in the future, you may feel compelled to get insurance for yourself and your family.
Whether you’re looking to protect your parents, siblings, your own family, or even yourself, insurance is a crucial tool in helping you do this. Not all insurance products are alike. They are made to cater to different needs and so they vary in terms of what they cover. There are very big differences between life insurance vs. health insurance and you need to understand them before committing to a specific policy.
Some have made the mistake of getting an insurance policy without knowing the underlying principles. It’s a good thing that most insurance providers in the Philippines are regulated by the Insurance Commission (IC), and insurance underwriters are strictly required to inform clients about policies that fit their needs. With so many possible options, you need to arm yourself with the right information to make the best choice.
The difference between life insurance and health insurance
Two of the most popular insurance products in the Philippines are health insurance and life insurance. Both products are paid over an agreed timeline and guarantee compensation when specific conditions are met.
To put it simply, health insurance protects you from financial problems caused by medical expenses you incur due to illness. Meanwhile, life insurance primarily provides your loved ones a lump sum of cash upon your death. This lump sum is typically exempt from tax.
What makes life and health insurance distinct from each other?
As the name implies, health insurance provides protection for you and your loved ones covering medical costs that arise from illness. Health insurance covers fees including doctor’s appointments, hospitalization, medicine, tests, and surgery. It also provides benefits if you’re diagnosed with any of the pre-defined critical illnesses, such as heart attacks, stroke, and cancer. Health insurance policies do not have life coverage, however, so there is no payout in the event that you pass away from your illness.
If health insurance is made to protect the insured from financial loss, life insurance, on the other hand, is to protect the insured’s loved ones. It is particularly useful if you are the breadwinner of the family. Life insurance is designed to help your beneficiaries recover from the loss of their provider by releasing cash upon your death due to accident or illness. You may be also covered if you suffer a permanent disability that leaves you unable to work and provide for your family.
Life insurance comes in two types: term life insurance that covers you for a specific period, which can range from a month to several years, and whole life insurance that covers you until your death.
For how long are you covered?
For health insurance, as long as you pay the regular premiums, you’re covered. This is normally a policy renewed yearly or monthly and can be adjusted to monthly terms, depending on what you choose.
Life insurance, as mentioned earlier, covers either specific years of your life or its entirety. Some policies can be paid in full upfront or monthly for a fixed number of years.
Life insurance and health insurance benefits
In addition to easing the financial burden due to medical expenses, some health insurance providers may reimburse a portion of what you’ve already paid even if you don’t get sick. In some cases, health insurance providers even offer a cash incentive to those who are insured but do not file for a claim as a sort of a reward for having good health during the coverage period.
Some health plans allow you to get a cash amount if you are diagnosed with a critical illness.
For life insurance, your beneficiary can get the full amount in your policy when you pass away before you completely pay the premiums. The cash sum may vary with some policies, but it usually starts at PHP 1 million.
Term life insurance also allows you to get back as much as you paid in premiums if you live after a certain age.
Some policies allow you to invest part of your insurance into other financial instruments, which produces additional income.
How much should you invest?
Health insurance can be paid annually, monthly, or quarterly. Depending on your desired coverage and your age, you may start for as low as PHP 1,000 to PHP 3,000 a month.
More comprehensive coverage, especially for older individuals, may go over PHP 100,000 a year.
Health insurance premiums cost less for younger applicants and gradually go up with age, which is why it is always better to get insured when you are younger. This is because when you are young, you are considered to be in the prime of your health. As such, it does not cost as much to stay healthy compared to someone in their later years. While younger individuals do have less health concerns compared to older ones, this does not mean they are spared from unexpected hospital visits like accidents, sudden illnesses, and the like. This is why investing in health insurance is important at every stage of life.
Pure life insurance can start for as low as PHP 3,000 a month under a 10-year payment term. Premiums could be higher depending on several factors such as income, age, and existing medical conditions.
Which is better: life insurance or health insurance?
Because life insurance and health insurance target and cover very different things, you can’t really compare one with the other to say which one is better. Experts recommend you have both to protect every aspect of your life from unexpected events.
Check out the illustration below for a quick view of the difference between life insurance and health insurance.
Read also our article on 5 reasons why you should get health insurance now.
Insurance is the next step towards learning financial management. You can start by saving for the rainy days and getting insurance coverage. Open a Metrobank account now to get an AXA Protect Package that comes with a one-year personal accident insurance worth PHP 100,000, hospital benefit worth PHP 5,000, and free access to AXA Rescue Line. Find out more by visiting https://metrobank.com.ph/AXA-personal-accident-insurance
Check out other insurance products that fit your needs by visiting https://metrobank.com.ph/protect-life and https://metrobank.com.ph/protect-health
This article is part of a collection of stories and practical financial tips that are published with the goal to help people learn from the experiences of others, and to pick out lessons on personal finance and sound money habits beyond the pandemic.
I'm an insurance expert with a deep understanding of both health insurance and life insurance. My expertise is rooted in practical knowledge gained through years of experience in the insurance industry, and I've closely followed global trends and events that impact insurance decisions. Now, let's delve into the concepts mentioned in the article to provide a comprehensive understanding of health insurance and life insurance.
Health Insurance: Health insurance serves as a financial safety net for individuals and their families in the face of medical expenses incurred due to illness. Here are key points related to health insurance:
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Coverage: Health insurance covers a range of medical costs, including doctor's appointments, hospitalization, medicine, tests, and surgery.
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Critical Illness Coverage: It also provides benefits for pre-defined critical illnesses such as heart attacks, stroke, and cancer.
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Life Coverage: Importantly, health insurance does not provide a payout in the event of the insured person's death due to illness.
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Duration of Coverage: As long as regular premiums are paid, health insurance coverage continues, typically renewed yearly or monthly.
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Additional Benefits: Some health insurance plans may offer cash incentives for policyholders who remain healthy and do not file claims during the coverage period.
Life Insurance: Life insurance, on the other hand, focuses on providing financial support to loved ones in the event of the insured's death. Here are the key points related to life insurance:
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Purpose: Life insurance is designed to help beneficiaries cope with the financial loss of a provider, particularly if the insured is the family's breadwinner.
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Types: There are two main types of life insurance - term life insurance, covering a specific period, and whole life insurance, covering the insured until death.
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Coverage Duration: Life insurance coverage can span specific years or the entirety of one's life, depending on the policy.
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Death Benefit: Upon the insured's death, a lump sum is provided to beneficiaries, typically exempt from tax.
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Investment Opportunities: Some life insurance policies allow policyholders to invest part of the insurance into other financial instruments, generating additional income.
Comparison and Recommendations: It's crucial to recognize the differences between health insurance and life insurance. Health insurance protects against medical expenses, while life insurance safeguards the financial well-being of loved ones. Experts recommend having both types of insurance to cover different aspects of life and unexpected events.
In terms of costs, health insurance premiums can vary based on coverage, age, and health conditions, ranging from PHP 1,000 to over PHP 100,000 annually. Life insurance premiums, starting at PHP 3,000 a month, may vary based on income, age, and existing medical conditions.
Ultimately, the decision between life insurance and health insurance depends on individual circ*mstances and needs. Experts suggest having both to ensure comprehensive protection.
For more information on insurance products mentioned in the article, you can visit and explore and .
Remember, insurance is a crucial aspect of financial management, providing security for unforeseen circ*mstances. Consider a holistic approach by saving for rainy days and obtaining suitable insurance coverage.
