But they are actually very different and knowing the difference is useful as they both offer coverage every individual need in different parts of life. Health insurance plans make a huge difference in expenses when you get any treatment, and a Life Insurance plan is a safety net for your family in case of your untimely demise. But let us learn about these two plans in detail below along with the key differences. This will help you decide which one you should go for first or which one is more suitable for your needs in the current circumstances.
What Are Life Insurance Plans?
Life Insurance plans can be described as an agreement between an insurance company and an insurance policyholder in which the insurer contracts to pay an amount in a swap for a premium after a fixed period or on the loss of an insured person. It only works if the insurance holder pays all the premiums consistently. Expressly, life insurance plans are acknowledged for rendering life protection to the policyholder. This Life Protection secures the future of your loved ones by paying them an amount in a state of an adverse event.
There Are Two Main Categories of Life Insurance:
• Whole Life Insurance
It has a set premium outlay and the sum assured to the receiver is usually fixed and tax-free. Compared to Universal Life Insurance, it's cheaper insurance that foresees the low-risk strategy. You can also take a loan against this sort of policy.
• Universal Life Insurance
It can also be termed as an investment plan that even gives the policyholder a death benefit. Some of its parts are reinstated with amenable premium payouts to supplement extra cash benefit to the sum assured.
What Are Health Insurance Plans?
Health Insurance , also known as medical insurance plans, is an agreement between the insurance company and the insured to present financial protection at the time of medical requirements. Here, the Insured has to pay a set premium for their health cover.
If one has health insurance, they can get reimbursement of the medical bills or the insurance company can take care of it on their behalf, depending on the health insurance plan that's chosen. Some health plans also include the expense of your prescription medicines.
Three Main Categories of Health Insurance:
• Individual Health Insurance
Individual health insurance is for a person, as the name implies. It is utilized to financially cover expenses such as illnesses, hospitalization, accidents, and medical crises, which may happen during one's lifetime.
• Family Floater Health Insurance
In this type of plan, all the household members are covered at one premium. It covers diseases, hospitalization, accidents, and other medical expenses that may occur throughout our lifetime.
• Senior Citizens Health Insurance
These insurances are for those whose age is above 60 years. Therefore, they are called senior citizens. It is designed keeping in mind the many physical and psychological requirements of people above 60 years of age. This includes organ donation expenses, domiciliary care, and critical illnesses.
Difference Between Health Insurance and Life Insurance
Life insurance provides financial protection to your family in the event of your premature death. It can help them manage their lifestyle and accomplish their life goals, even when you are not around. In contrast, health insurance covers the cost of your hospitalization and similar treatments. Most of the policies these days provide cashless treatment facilities in network hospitals.
Life insurance provides a sum assured benefit, which is paid to the nominee of the individual. At the same time, health insurance covers the highest coverage cost and the cost of medicine for diseases or medical conditions directed towards other conditions.
Life insurance provides additional benefits to the insurer, such as maturity benefit, loyalty addition, surrender benefit, and so on, and you can be attached on top of the base cover. Whereas in health insurance, you cannot claim the bonus, which can be added in the case of certain types of policies. Some health insurance companies also provide free health check-ups.
You can avail tax benefit in life insurance under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Whereas, in health insurance, you can avail of a tax benefit under section 80D of the Income Tax Act, 1961.
The above main differences between a health insurance and a life insurance policy will help you make an informed decision to choose either depending upon your personal preferences or needs. life can be unpredictable, and it is always better to have a protective cover over yourself and your loved ones in uncertain times. As both insurance policies are crucial it is highly advisable to include them both in your financial portfolio.
In order to safeguard your future from unforeseen circumstances, invest in a health insurance policy with Kotak General Insurance, and fulfil all your insurance needs.
Disclaimer: The content provided is for education and informational purpose only, none of the information contained in our blog amounts to any form of opinion or advice. Please go through policy related documents carefully or consult an expert before making any insurance-related decisions.