Two of the most important types of insurance – life and health are sometimes considered to be very similar to one another. Many have the habit of associating a good life with good health and they tend to mix up life insurance with a health insurance policy. However, these are very different from each other, serving specific purposes.
Understanding the policies
Life insurance is a safety net offering financial cushion to family members of the deceased policyholder. The policy ensures that the family’s financial stability is maintained in case of death of its breadwinner. This is done by paying the sum assured to the nominee. Thus, it’s important for every individual to buy a life insurance policy for the security of their loved ones.
A health insurance policy, on the other hand, will pay for the costs incurred due to hospitalization in case of a medical emergency. While normal health insurance pays only the actual expenses incurred, a critical illness plan provides a lump sum upon diagnosis of a critical ailment mentioned in the policy.
There are certain differences that are worth looking into before you decide on the one that fits your needs:
Nature of coverage
- In case of a life insurance policy, the nominee receives a lump sum benefit in the case of death of the policyholder. However, it is not the case with health insurance.
- In the case of health insurance, the policy will cover expenses which are incurred in the medical treatment of the disease. This is not true for a life insurance policy which has nothing to do with expenses incurred on one’s health problems.
- Life insurance is a long-term commitment where one needs to pay premiums for a continuous period of 5-10 years as mentioned in the policy. On the other hand, health insurance is an annual contract that needs to be renewed every year.
- For life insurance policies like unit-linked insurance plans (ULIPs), a certain part of the premium is invested in the markets to earn returns. There’s no investment component in a health insurance plan.
Life and health insurance combined are essential for comprehensive protection. Both the plans cover different risks, thus making it important to purchase both at the earliest.
Bajaj Finserv helps you buy the best life and health insurance policies. Also, with pre-approved offers on a gamut of loans, availing finance is quick and easy. All you need to do is to share basic details to know your pre-approved offer.