Exploring Differences Between Health and Life Insurance

One of the most important parts of planning for the future is having insurance for yourself. Both life insurance and health insurance are crucial forms of risk mitigation that provide financial protection in the event of serious injury, illness or untimely death. Of course, they do this in different ways.

Here are 6 key areas of difference between health and life insurance:

1. Purpose Health insurance

is a general insurance that covers medical expenses, typically limited to hospitalisation and follow-up treatment. Life insurance is a type of personal insurance that pays an assured sum in the event of your death to the nominee/s you specify.

2. Maturity Health insurance

does not have a maturity date. You can only make claims against actual expenses, limited to the maximum sum insured. Life insurance will begin cyclic payouts after the maturity date, along with a lump sum death benefit.

3. Additions Health insurance

policies have a no-claim bonus. As long as you don’t make any claims, the cover increases every year till it reaches a fixed limit or cap. You can add riders – a provision that adds to or amends the term or amount of coverage, often for an additional cost – for higher coverage in specific situations, like personal disability, cancer or critical illnesses. Life insurance policies also have riders like loyalty additions and surrender benefits if you withdraw early. There are also plans available for specific purposes, like retirement planning, child-related insurance, and term plans that cover you for a specific period.

4. Scope of Coverage Both health insurance and life insurance

are available with individual and group coverage (for employees of a company). Still, you can also buy family floater health insurance policies that cover your entire family, but you will need to buy life insurance separately for each family member.

5. Premium Payments

Since there is no maturity benefit, health insurance premiums are paid in lump sums upfront each year, with the option of paying for additional years in advance. Life insurance premiums can be paid in a lump sum, instalments, or a combination of the two. You can choose whichever option is most convenient.

6. Tax Benefits

Both types of personal insurance offer tax benefits. Health insurance premium payments can be claimed under Section 80D of the Income Tax Act, and life insurance under Section 80C, Section 10(10D) of the Income Tax Act. While most of your financial planning should be around mutual funds, equity funds and other investments, insurance is important, too. Safeguard yourself and your loved ones by putting some money into both life and health insurance!

Understanding the debate between life insurance vs health insurance is crucial for making informed financial decisions that align with your needs and goals. While health insurance safeguards your well-being by covering medical expenses during your lifetime, life insurance provides financial protection to your loved ones after your passing. Additionally, exploring the benefits of term insurance, such as affordability and customizable coverage periods, can offer peace of mind for your family’s financial future. Ultimately, whether you’re considering term insurance or permanent life insurance, ensuring you have adequate coverage in place is essential for protecting yourself and your loved ones against life’s uncertainties.

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Similar blog you may also like to read – How to Choose Health Insurance for Women

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