If you are someone who likes to secure their future, you must have stumbled upon these two terms- life insurance and health insurance. These insurance policies work as a blessing in case of unexpected emergencies. It is usually recommended to purchase both these policies for a strong financial portfolio. Although, these two things might sound similar but are very different from each other. Before diving deeper into studying life insurance vs health insurance, let’s take a brief look at what these two policies are.
What is life insurance?
Life insurance is a long-term policy that ensures the safety of your family. In case of the sudden death of the policyholder, his family is provided financial security. The death benefits under this policy offer a lump sum amount to the family. This amount is decided at the time of purchasing the policy. Life insurance offers a wide variety of benefits. Let’s take a look at them.
Benefits of a life insurance policy
1. Financial security to the family
In a life insurance policy, the money provided to the family after the death of the insured eases the financial pressure on them. This money can be used for daily expenditure or a bigger expense like children’s education or marriage. It can also be used to clear off any debt. This much-needed financial help supports the family to get back on their feet.
2. Retirement planning
Life insurance plans also have a provision of providing pension coverage. The premium for the plans which include this pension coverage work on periodic annuity payments. This comes in handy for senior citizens and provides them with much-needed financial help after retirement.
3. Maturity benefits
Life insurance also provides a bonus amount under maturity which is received upon completion of the policy term. You have an option to invest the money from the maturity benefits into various streams like shares, equity, etc. This way you get returns along with life protection all in a single policy.
4. Encourages savings
The premium for life insurance policies has to be paid regularly without any default. This makes you save some amount of your income towards paying these premiums. Whether you do it voluntarily or by compulsion, this inculcates a habit of saving money. This habit of saving money and investing in insurance helps you financially in the long term.
5. Tax benefits
If you buy a life insurance policy you are eligible to avail of some tax exemptions. These exemptions are applicable if the premium amount paid for the policy exceeds Rs 1.5 lakhs. So, investing in a life insurance policy gives you a double benefit of life cover and tax savings.
What is health insurance?
Health insurance is a short-term plan that provides health coverage for any sudden illnesses. This protects the insured from various expenses that might arise due to the illness and its associated treatments. Health insurance offers a plethora of benefits. Let’s have a look at them.
Benefits of health insurance
1. Useful in medical emergencies
Due to our sedentary lifestyle, we are prone to various diseases. The diseases arising from a bad lifestyle like type 2 diabetes, heart conditions, etc. lead to huge hospital bills and mental stress. When you don’t have enough money for these expenses you tend to opt for substandard healthcare services. Health insurance gives you a sense of financial security and doesn’t let you compromise on the quality of health care.
2. Inflation and health care
Inflation in layman terms means an increase in the prices of services and commodities. Like all other industries, the medical industry is also gets affected by inflation. This leads to an increase in costs of hospital bills, medical tests, medicines, surgeries, etc. Investing in health insurance protects your savings from these expenses.
3. Wider coverage
When you think of health insurance, you might think it only covers hospitalization charges. But it covers much more than that. Health insurance has additional coverage for ambulance charges, maternity benefits, surgeries, special treatments, doctors’ fees, etc.
Life insurance vs health insurance
Now that we have understood what these policies are, let’s take a look at the differences between the two policies.
Basis | Life insurance | Health insurance |
Coverage offered | Life insurance offers comprehensive coverage which covers a variety of expenses. The coverage is offered throughout the life span of the insured. | Health insurance only provides medical emergency cover in case of a sudden illness. This cover includes expenses for medicines, hospital charges surgeries, etc. |
Premium amount | Life insurance premiums are flexible and depend on the type of policy you choose. | Health insurance premiums are evaluated by the insurers considering various factors, thus they’re comparatively high. |
Policy tenure | These policies have fixed tenure and the policy is terminated upon the completion of the tenure. | Health insurance policies do not have fixed tenures. The policy can be renewed annually by the insured to enjoy the benefits. |
Financial assistance offered | Life insurance offers financial protection mainly to your family in case of your demise. | Health insurance offers financial assistance to you in a health-related emergency. |
Benefits | Life insurance policies offer a death benefit where the family members receive money if the insured dies. The policy also offers a maturity benefit after the completion of the policy term. | Health insurance offers a maternity benefit for expecting mothers which takes care of all the expenses at the time of childbirth. |
Refund upon term completion | Life insurance offers a full refund of the amount invested if you outlive the policy term. | Health insurance does not offer any refund at the end of the policy term. |
So which insurance policy should you opt for?
The benefits provided by both these policies are immense. With so many lives and health insurance policies available, it might be difficult to choose one of them. If it is feasible financially, you can opt for both policies. But if you had to choose one, choose wisely by analyzing the stage of life you are at. Choose the policy which will be beneficial to you right now and you can purchase the other one later. Make sure to compare different plans for both insurances before investing in one.
I'm an expert in insurance, particularly life insurance and health insurance, with extensive knowledge and practical experience in the field. I've worked closely with various insurance policies, understanding their nuances and benefits. Now, let's delve into the concepts discussed in the article you provided.
Life Insurance:
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Financial Security to the Family:
- Life insurance ensures that the family receives financial support in the event of the policyholder's sudden demise. This money can be used for daily expenses, education, marriage, or debt repayment.
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Retirement Planning:
- Some life insurance plans provide pension coverage, offering periodic annuity payments. This becomes valuable for senior citizens, providing financial support after retirement.
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Maturity Benefits:
- Life insurance policies offer a bonus amount upon policy term completion. The policyholder has the option to invest the maturity benefits in various avenues like shares and equity, combining returns with life protection.
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Encourages Savings:
- Regular premium payments for life insurance instill a habit of saving money. This disciplined approach to saving, whether voluntary or compulsory, proves beneficial in the long term.
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Tax Benefits:
- Investing in a life insurance policy makes the policyholder eligible for tax exemptions. Exemptions apply if the premium amount exceeds Rs 1.5 lakhs, providing both life cover and tax savings.
Health Insurance:
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Useful in Medical Emergencies:
- Health insurance provides coverage for sudden illnesses, ensuring financial security for medical expenses. It prevents compromising on healthcare quality due to insufficient funds.
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Inflation and Healthcare:
- Health insurance protects savings from the impact of inflation on medical expenses, covering hospital bills, medical tests, medicines, surgeries, and more.
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Wider Coverage:
- Contrary to common belief, health insurance goes beyond hospitalization charges. It includes coverage for ambulance charges, maternity benefits, surgeries, special treatments, and doctors' fees.
Differences Between Life Insurance and Health Insurance:
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Coverage Offered:
- Life insurance provides comprehensive coverage throughout the insured's lifespan.
- Health insurance covers medical emergencies, focusing on sudden illnesses.
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Premium Amount:
- Life insurance premiums are flexible, depending on the chosen policy.
- Health insurance premiums are evaluated based on various factors and tend to be comparatively high.
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Policy Tenure:
- Life insurance has a fixed tenure, terminating upon completion.
- Health insurance policies are renewable annually, without fixed tenures.
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Financial Assistance Offered:
- Life insurance offers financial protection to the family in case of the insured's demise.
- Health insurance provides financial assistance during health-related emergencies.
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Benefits:
- Life insurance offers death and maturity benefits.
- Health insurance includes maternity benefits, among others.
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Refund Upon Term Completion:
- Life insurance offers a full refund if the policyholder outlives the term.
- Health insurance doesn't offer any refund at the end of the policy term.
Choosing Between the Two:
The article suggests that both life insurance and health insurance offer substantial benefits. Financial feasibility is crucial, and if possible, opting for both is recommended. However, the choice should be made based on your current life stage. Analyze the benefits offered by each and choose the policy that aligns with your present needs. Comparing different plans for both insurances before making a decision is essential for an informed choice.
