Don’t Be Confused Between Life & Health Insurance: Know The DifferencesThe terms health insurance and life insurance may seem similar as they both cover the insured person against an unforeseen and unfortunate event but they are entirely different from each other in terms of definition and type of coverage and benefits they offer. To know about the difference between life and health insurance in detail, stay tuned and read the post.
Life InsuranceLife Insurance is a contract between an insured person and an insurer (insurance company). According to this contract, the insurer promises to pay a sum of money (death benefit) to the named beneficiaries or dependents of the insured person upon his or her death and the insured person has to pay a fixed premium. Life insurance offers a way to the insured person to help his or her family members financially. It is not a saving or investment product as its main purpose is to provide financial help to the surviving dependents of the insured person after his or her death during the length of the policy. It assures the insured person or the policyholder that his or her family or dependents can maintain their life and fulfill their needs in case of his or her untimely demise. Some key points to keep in mind:
- It is a type of insurance in which the insurance company provides the financial help or an assured sum to the beneficiaries or dependents of the insured person on his/her death during the life of the policy. The insured person has to pay a fixed premium.
- It provides death benefits.
- Money invested as a premium can be recovered on the maturity of the policy.
- It is less expensive.
- Common types: Term insurance, endowment plans, pension plans, money-back plans, etc.
Health InsuranceIt is also a contract between the insurer (insurance company) and the insured person in which the insurer is supposed to cover the hospital and medical expenses of the insured person during hospitalization due to an injury, accident, or critical illness. The insured person has to pay a fixed premium at regular intervals as specified in the policy. Whenever you fall sick or meet an accident you can get yourself admitted to the hospital and you do not need to pay the high costs for being hospitalized and the following treatment. Health insurance does not provide a death benefit, meaning there is no payout upon the death of the policyholder. A health insurance policy can be of many types depending on the benefits provided and the number of people covered in the policy. Some common types of health insurance include individual health insurance plans, family floater policy, surgery or critical illness policy, etc. Some key points to keep in mind:
- It is a type of insurance in which the insurer (insurance company) covers all hospital expenses of the insured person during hospitalization due to injury, illness, etc, and the insured person has to pay a fixed premium.
- It provides treatment and medical benefits.
- Money cannot be recovered after the policy expires.
- It is comparatively more expensive than life insurance.
- Common types: individual health insurance, family floater policy, critical illness policy, pre-existing disease cover, senior citizen health insurance.