Health insurance and life insurance are two important financial risk management tools that prepare you to deal with unforeseen events in your life.
But when it comes to purchasing an insurance plan, most people wonder: Should I buy health insurance, life insurance, or both? If you are also confused, you are in the right place.
In this blog, we will discuss the difference between life and health insurance in detail.
What is Health Insurance?
Health insurance is a category of insurance in which your insurance company offers coverage for unforeseen health emergencies in exchange for an insurance premium. In other words, it is a legal agreement between you and your insurer where your insurer pays for your unforeseen medical expenses.
When you have health insurance plans, you can handle the unexpected hospitalisation without touching your savings or making last-moment money arrangements. With a health insurance policy, a significant portion of your medical bills is covered by your insurance company on your behalf.
Benefits of Health Insurance
Offers coverage for medical expenses.
Offers preventative care.
Makes quality healthcare accessible.
It offers benefits like no-claims bonuses, cashless hospitalisation, preventative care, and more.
Helps in maximising savings.
What is Life Insurance?
Life insurance is a category of insurance in which the insurance company offers a predefined sum insured to the policyholder's nominees in the unfortunate event of his/her demise.
In simple terms, life insurance is a legal contract between you and your insurer. According to this contract, your insurance company will pay an agreed sum insured to your nominees in case of your sudden demise. The insured sum is reimbursed based on the terms and conditions of the policy.
The main objective of life insurance is to provide financial support to your dependents or loved ones in your absence.
Benefits of Life Insurance
Ensures financial security to dependents in the form of death benefits.
Helps in paying outstanding debts.
Acts as an income replacement upon demise.
Helps in covering funeral expenses.
Offers peace of mind.
Difference Between Life and Health Insurance
Parameters |
Life Insurance |
Health Insurance |
Purpose | It offers death benefits to the nominees in case of the unfortunate demise of the policyholder during the policy tenure. | It offers coverage for medical expenses and hospitalisation costs incurred due to unforeseen injuries and illnesses. |
Key Benefit | A fixed sum insured is given to the nominees after the demise of the policyholder. | It covers medical expenses and offers benefits like cashless hospitalisation. |
Type of Plans | Term life insurance, whole life insurance, etc. | Individual health insurance, family health insurance, senior citizen health insurance, etc. |
Additional Benefits | Surrender Benefits, Maturity Benefits, Loyalty rewards, etc., can be offered. | Additional benefits like No Claims Bonus, Routine Check-ups, etc., are offered by most health insurance providers. |
Tax Benefits | It offers tax benefits under Section 80C and Section 10(10D) of the Indian IT Act. | It offers tax benefits under Section 80D of the Indian Income Tax Act. |
Policy Tenure | Life insurance is usually purchased for a longer tenure as compared to health insurance. | Health insurance plans usually have a shorter tenure. Once the policy period is over, you have the option to renew on an annual basis. |
Survival Benefits | Some life insurance plans offer survival benefits to the policyholder in case he survives the policy tenure. | No survival benefits are provided to the policyholders (unless specified). In case of a policyholder's demise during the tenure, the policy gets terminated. |
Premiums | Premiums can be fixed or variable in life insurance plans. | Premiums are usually fixed in the case of health insurance plans. |
Life Insurance Vs Health Insurance Examples
Let's understand the difference between life and health insurance in detail with the help of examples.
Life Insurance Example
Suppose Ramesh, a 30-year-old, purchases a term life insurance policy with a sum insured of ₹50 lakhs for a 20-year tenure. In case he dies during the policy tenure, his insurance company will offer ₹50 lakhs to his nominees.
In case he survives this tenure, no death benefits will be given. However, if it is an endowment or any other life insurance plan, Ramesh may still receive the payouts after the maturity of his policy.
Health Insurance Example
Suppose Suresh has purchased a health insurance plan with a maximum coverage of ₹5 lakhs. After a few months, he was diagnosed with a medical condition and needed immediate treatment worth ₹3 lakhs.
Except for a few voluntary deductibles, Suresh's insurance company will pay a significant chunk of these expenses. After making the first claim, Suresh will still have coverage of ₹2 lakhs, which he can claim in the remaining tenure of his policy.
Types of Health Insurance
There are multiple
types of health insurance plans available, each with its purposes, features and benefits. Some of the most common types of health insurance policies are as follows:
Individual Health Insurance
It is the most common type of health insurance plan in India. As the name suggests, it is designed to cover an individual for unforeseen hospitalisation and other such events.
The best individual health insurance plans, including Reliance General’s individual health insurance, cover expenses incurred due to injuries, illnesses, sudden hospitalisations, daycare procedures, surgeries and more.
Family Floater Health Insurance
The family floater health insurance is similar to individual health insurance. However, it offers coverage for the entire family rather than an individual.
With this type of plan, you can cover yourself, spouse, dependent children and parents under the same plan. The insurance benefits in this plan are shared among all the members.
Senior Citizen Health Insurance
Senior citizen health insurance is a specialised insurance that offers dedicated coverage for aged individuals. It covers pre and post-hospitalisation expenses arising from illnesses and injuries. Besides regular coverage, senior citizen health insurance plans also offer additional benefits like preventative treatments, routine check-ups, etc.
Group Health Insurance
These health insurance plans are designed for a group rather than an individual. Employers and organisations usually purchase them for their employees or group members. The best group health insurance policies cover expenses arising from medical emergencies, accidents, injuries, maternity expenses and more.
Critical Illness Insurance
It is a specialised health insurance plan designed to cover the medical expenses arising due to critical illnesses such as cancer, cardiac arrest, kidney failure and more.
You can purchase
critical illness insurance as an individual policy or as an add-on for your existing health insurance plan. As compared to other plans, such plans offer a lump-sum amount to cover the cost of treatment.
Types of Life Insurance
There are multiple types of life insurance plans provided by different providers. Here are the three most common policies:
Whole Life Insurance
A whole life insurance plan offers lifetime coverage to the policyholder in exchange for fixed premiums. Upon the policyholder's death or the plan's maturity, the beneficiaries receive a tax-free sum insured.
Term Life Insurance
It is one of the most popular types of life insurance plans available in India. A term insurance plan, as the name implies, offers coverage for a specified term, which can be 10, 20, or even 30 years. This means that if the policyholder dies within this fixed term, the insurance company will offer benefits to his/her nominees.
Endowment Policy
An endowment policy is a type of life insurance cover designed to offer dual benefits to the policyholder. It offers benefits in case of the policyholder's demise during the policy tenure.
Even if the policyholder survives the tenure, he/she will receive the payouts. In this way, it ensures both financial security and savings.
When to Buy Health Insurance?
Health insurance is a vital financial management tool that allows you to get quality treatment without putting a strain on your bank balance. You should consider buying health insurance if:
You have a deteriorating health condition.
You are at risk of serious health conditions as per your medical or family history.
You have dependents or planning to start a family.
When to Buy Life Insurance?
Life insurance offers a way to financially support your family and dependents even when you are not around. For instance, if you have a family and you are the sole earner, then a life insurance plan will help your dependents to cover living expenses in case you are no more. You should consider purchasing a life insurance plan if;
You have dependents and you are the only earning member of your family.
You have taken loans such as education loans or personal loans, and you don't want to burden your co-applicants for repayment.
You have a significant home loan.
You are a business owner who wants to ensure the smooth running of your business even in your absence.
Conclusion
Life insurance and health insurance are two important financial management solutions that prepare you against the unforeseen. While life insurance plans offer necessary financial support to your family after your demise, health insurance plans offer coverage during your policy tenure.
If you are searching for good health insurance policies in India, look no further than Reliance General Insurance.
We offer tailored
health insurance plans to ensure good health and financial safety to you and your family. We offer comprehensive health insurance policies that cover hospitalisation, medication expenses, pre and post-hospitalisation expenses and more.
Get your quotes today!
Frequently Asked Questions
Which is better: life insurance or health insurance?
Both types of insurance serve different purposes. Health insurance offers coverage for unforeseen medical expenses, while life insurance offers compensation to your nominees upon your sudden demise.
Does health insurance offer death benefits?
No. Health insurance policies do not offer death benefits. It only covers medical and hospitalisation expenses but does not offer payouts upon the policyholder's death.
Can I get health and life insurance combined health insurance?
Health insurance and life insurance are two different insurance products. However, some insurance providers may offer a plan with combined benefits of both life and health insurance.
Can I purchase both life insurance and health insurance?
Yes. You can buy both life insurance and health insurance based on your needs and budget.
Is life insurance worth buying?
Life insurance is definitely worth buying, especially if you have dependents and you are the only earner in the family. The death benefits will allow your loved ones to manage their living expenses in your absence.
What is the right age to buy health insurance?
There is no right or wrong age to buy health insurance. You can purchase a suitable policy as soon as you turn 18. Note that the sooner you purchase health insurance, the better.
By purchasing your health insurance at a young age, you can benefit from low premiums due to low medical risk.
Are health insurance and life insurance the same?
No. Life insurance and health insurance are two completely different products with different purposes and benefits.