Life Insurance vs Health Insurance: Key Differences

Posted on: Sep 3, 2025 | 3 mins | Written by: HDFC ERGO Team

Life Insurance vs Health Insurance: Key Differences

What is Life Insurance?

Life insurance is a plan where the insurance company provides a lump sum payout (the death benefit) to the insured’s family if the policyholder dies. This is in exchange for regular policy premiums paid by the policyholder. The lump sum helps the deceased’s family manage their living expenses.

What is Health Insurance?

Health insurance is a financial product where the insurance company provides coverage for your medical expenses in exchange for a premium. The costs include consultation charges, specific therapies, pre-hospitalisation, post-hospitalisation, and other expenses.

Popular types of medical insurance plans are:

• Individual plans

• Family floater plans

• Senior citizen plans

• Critical illness plans

Difference Between Health Insurance and Life Insurance

The table below explains health insurance vs. life insurance:

Details	Life Insurance	Health Insurance
Coverage	Lump sum payout to the insured's family if they pass away within the policy's tenure	The insurer offers the insured and his family financial protection for the medical expenses
Benefits	Life cover, savings, investments, medical cover, etc., are some benefits	Only medical coverage is offered
Tenure	Long-term policies; however, the coverage ends after paying off a lump sum when the insured dies	Short-term policies: The insurer keeps renewing the policy every year, based on the terms and conditions
No-claim bonus	No-claim bonus is not available in this case	Insurer offers a no-claim bonus to the insured if no claims were submitted in the policy year; the bonus is in the form of increased coverage or reduced premium rates
Returns on the amount invested	Offers good return on investments and opportunities for wealth creation for the insured	No chances of returns on investment
Benefits upon surviving the policy's tenure	Survival benefits could be in the form of guaranteed returns or market-linked returns available	No survival benefits; however, most medical expenses are covered during the policy's tenure
Tax Deduction	Deductions calculated under Section 80C and Section 10 (10D) of the Income Tax Act, 1961	Deductions calculated under Section 80D of the Income Tax Act, 1961

Conclusion

If you are looking for financial protection for yourself and your loved ones, investing in insurance is the right way to go. While a life insurance policy can help cover the financial commitments towards a family in the unfortunate event of the policyholder’s death, medical insurance safeguards against medical expenses.

FAQs

1. Is it necessary to have both insurance and life insurance?

Having both life insurance and health insurance is important for your financial well-being. Don’t give up one for the other.

2. Can I get medical coverage under a life insurance policy?

Some life insurance plans may include add-ons that cover specific medical expenses. However, for broader coverage, you should have a separate health insurance policy.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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