How to differentiate between Life Insurance and Health Insurance?

Today, different types of insurance products are available in the market and hence, one can get easily confused. To avoid this confusion, one needs to understand the basic difference between life insurance and health insurance.

Jul 09, 2015 01:07 IST others Sarika Kodag |

Insurance
Sometimes, lots of individuals opt for life insurance in the belief that they have enough life coverage to address all life and health related issues. But, this is completely inaccurate and might prove a costly oversight. Today, different types of insurance products are available in the market and hence, one can get easily confused. To avoid this confusion, one needs to understand the basic difference between life insurance and health insurance. It is important for a buyer to know what he pays for and what he receives in return. Generally, these insurance products lumped together due to the fact that they both cover an individual.
 
Life Insurance
  • Purpose:- Covers your life
  • Affordability:- Least Expensive
  • Tax Benefits:- Policyholders can avail tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Additionally, the premiums paid for the critical illness benefit also qualifies for a deduction under Section 80D.
  • Suitable for:- Those who have a mortgage or other debts, dependents including spouse, child etc.
Types of life insurance:-
  • Term insurance
  • Endowment plans
  • Unit linked insurance plans
  • Pension Plans
  • Money-Back Plans
Consider a scenario, if you have a mortgage of Rs 50,000 and credit card debts of Rs 50,000 that you want to be paid off if you die, then you need a life insurance with at least Rs 1,00,000 as death benefit to meet this goal.
 
In case of insured’s death, policyholders family will get the insured amount. This insurance is also known as term life insurance. The policy benefits is passed on to the nominee. Policyholder’s family can use this money to maintain their standard of living and can easily fulfill their all financial commitments. But, this policy doesn’t offer any benefits in case of survival of the insured during the policy span. However, policyholder can avail extra optional benefits such as disability, accidental death and critical illness.
 
Health Insurance
  • Purpose:- Covers the cost incurred when insured is hospitalized or expenses towards treating illnesses.
  • Affordability:- Expensive as compared to life insurance
  • Tax Benefits:- Tax exemption for paying the premium under Section 80D of the Insurance Act.
  • Suitable for:- All
Types of health insurance:-
  • Individual health plans
  • Family floater policy
  • Surgery and critical illness policy
  • Pre-existing disease cover
  • Preventive healthcare
  • Senior citizen health insurance
If you met with a major accident and medical bills are of Rs 1,00,000. Then, sufficient health insurance coverage makes a really huge difference in the amount you’ll pay.
 
Usually, these healthcare plans do not cover death benefit. A person who is not insured with health insurance may experience financial burden in case of critical illness. Hence, buy the best mediclaim policy before its too late. It will take care of your medical expenses during your rough time. It is better if you select a policy based on various factors such as coverage amount, cashless facility and list of network hospitals.
 
Both these policies are essential for all especially for a breadwinner even if they fulfill different purposes. With all the above-mentioned information, searching out which plan is best for you can be easy.
Life Insurance Health Insurance
Purpose  Covers your life Covers the cost incurred when insured is hospitalized or expenses towards treating illnesses.
Affordability Least Expensive Expensive as compared to life insurance
Tax Benefits Policyholders can avail tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Additionally, the premiums paid for the critical illness benefit also qualifies for a deduction under Section 80D. Tax exemption for paying the premium under Section 80D of the Insurance Act.
Suitable for Those who have a mortgage or other debts, dependents including spouse, child etc. All
Types
  • Term insurance
  • Endowment plans
  • Unit linked insurance plans
  • Pension Plans
  • Money-Back Plans
  • Individual health plans
  • Family floater policy
  • Surgery and critical illness policy
  • Pre-existing disease cover
  • Preventive healthcare
  • Senior citizen health insurance

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