What are the differences between Health Insurance and Life Insurance?
For those who are just figuring out their way around getting insurance, the sheer number of insurance options available and the different types can be quite staggering. Car insurance, home insurance, marine insurance, fire insurance the list goes on.
Critical illness insurance
This leads to ambiguities in coverage, premium and benefits when two policies either sound similar or seem to cover the same risks. Since people associate a good life with good health primarily (rightly so), they usually get life insurance and health insurance mixed up.
Untangling the mix up!
Life insurance, also known as term insurance, is an insurance policy that covers the insured against the possibility of an unexpected death for a specified term, ensuring that the policyholder’s family is provided for and their financial stability is restored. This is done either through a lump sum benefit at the time of the insured’s death or a combination of lump sum amount and monthly installments as required.
Health insurance policies pay for costs incurred during diagnosis, treatment, surgery hospitalization and other allied expenses in the event of the policyholder contracting a disease. Health insurance can reimburse the medical bills incurred or provide a lump sum benefit depending on the policy and insurance company.
There are some key life insurance and health insurance differences that are worth looking into before you go for the policy that fits you the best.
Death benefit - lump sum payment
Life insurance will provide a lump sum payment in the event of death of the insured while health insurance will not.
Medical expenses coverage
Health insurance will cover the expenses incurred during diagnosis, treatment and hospitalization in the event of a disease, while term insurance will not cover these expenses.
Critical illness coverage
In the event of contraction of critical illness like cardiac ailments, cancer, kidney failure, etc., be sure to purchase specific critical illness health insurance policies that will cover the cost of treatment of these diseases. Life insurance does not cover critical illnesses by default. However, some insurance companies offer critical illness benefit riders that can be purchased as add-ons to the term insurance to cover the treatment costs in case of critical illness diagnosis.
The term of the health insurance policy is one year and will have to be renewed annually. However, the insured can specify the term of their life insurance policy and the premium will be calculated accordingly.
Since both the plans cover different risks, the wise decision would be to purchase both of these policies. HDFC ERGO offers the most attractive deals on life insurance and health insurance plans. As they say, “Life insurance is like fun. The older you get, the more it costs.” So, the best time to get both health insurance and life insurance is as soon as possible so that you can get the complete benefit and peace of mind at cheaper rates!
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