Difference between Life Insurance and Health Insurance
Life insurance is a term that we have heard since our childhood. Most of us probably even have a life insurance policy, and if not us, the generation before us definitely does.
Life insurance is basically an insurance drawn on your life, which means that the policy matures on the account of the death of the policy holder. This is created so that the survivors or the nominees of the policy are financially secure after the demise of the policyholder. The tax benefit behind buying a life insurance policy is that the amount that a nominee receives on maturity is exempted from tax. This means that the amount promised on maturity is the actual amount that a nominee received.
There are 2 main types of life insurance policy.
Universal Life Insurancethrough this type of policy, the investor gets the death benefit. It has flexible premiums and flexible death benefits. This is mainly because the premiums are higher. The premium pay outs are also higher in this case.
Whole Life Insurancethis type of life insurance has a fixed premium pay out method. It is more affordable than a universal life insurance plan because of the low-risk approach. Another additional benefit of whole life insurance policies is that one can take a loan against the policy.
Health insurance, on the other hand, is a policy that is taken to provide financial aid in case of a medical emergency. Basically, when a medical emergency arises, one does not have to resolve to breaking any of their investments or borrowing or taking loans. The policy holder pays a certain amount of premium (usually annually), and when a medical contingency arises, the expenses are paid by the insurance company up to the total sum insured, which is predetermined. The beauty of a health insurance plan is that one does not only have to buy it for themselves, but can also buy it for others. Meaning, that an individual can be the policy holder, and pay the premiums, but the insured person can be any other party.
There are 3 main types of health insurance policies that one can buy.
Individual health insurance policythis policy covers only one individual, that is, the insured. Here, the plan can be customised according to an individual’s requirements and medical history.
Family floaterhere, an individual pays a certain premium amount (which is usually higher than an individual policy) and the family of the individual is covered under one policy itself.
Senior citizen policythis type of policy is curated for senior citizens, keeping in mind the fact that their medical needs are different from anyone else. This policy is usually expensive; however, it offers a comprehensive cover for senior citizens.
One must keep in mind to disclose one’s medical history during the purchase of the health insurance policy. If one does not disclose any ailments that they are suffering from, or medical history, it may result in claims being partially, or wholly declined.
Both these policies are equally crucial to one’s life. The health insurance policy makes sure there is no financial burden during a health crisis and the life insurance makes sure there is no financial crises arising from one’s uncertain death.
AN Sep 66/22