We all know that life is uncertain. Anything might happen at any time. No one was prepared for COVID 19. It took away millions of people battling it. Not just that, over the years, we have all seen that adversity arises without prior notice. Then why not take steps to secure yourself and your loved ones against unforeseen misery? Life Insurance and Health Insurance are two such products that can help you safeguard yourself and your loved ones. However, opting for one or both might become daunting if you lack knowledge about these products. Read further to learn about the differences between life insurance and health insurance.
More about Life Insurance
Life insurance is a financial contract wherein an individual pays a regular premium to an insurance company. In return, the insurance company provides a sum of money known as the sum assured to the beneficiaries upon maturity or in case of the insured’s death. This policy offers financial security to loved ones and assists in covering life expenses in the absence of the insured person. Thus, life cover serves as a safety net for the beneficiaries.
Types of Life Insurance
Various types of life insurance policies provide distinguishable benefits. We have tabulated a few for you.
Term Life Insurance
Term Life Insurance is a type of life insurance that provides life cover for a specified term, typically 10, 20, or 30 years, depending on the requirement. If the insured person dies before the completion of the policy tenure, the insurance company pays out a death benefit to the beneficiaries. Besides, the premiums for term life insurance are lower as compared to other life insurance policies. Also, the premiums paid are eligible for tax deductions under Section 80C of the Income Tax Act of 1961.
Whole Life Insurance
Whole Life Insurance offers permanent life coverage and provides the sum assured to the beneficiaries upon the insured person’s demise. The premiums of whole life insurance are typically fixed and higher than those of term life insurance. Moreover, the amount received upon death or maturity is tax-free under Section 10D of the Income Tax Act of 1961.
Endowment Policy
An Endowment Policy is a combination of insurance and savings. It provides a payout upon the policyholder’s death during the policy period or upon maturity. The amount received is tax-free under Section 10D of the Income Tax Act of 1961. Moreover, the premiums paid are also eligible for tax deductions under Section 80C of the Income Tax Act of 1961.
More about Health Insurance
Health insurance is a financial product wherein the insurer provides the insured with financial coverage for medical expenses. Policyholders pay regular premiums to an insurer, who, in turn, helps to cover the cost of healthcare services, encompassing medication, hospital stays, etc. It reduces the financial burden of unforeseen medical bills and makes healthcare more affordable.
Types of Health Insurance
Health insurance is not just a product but an essential element of a secure, healthy life. There are numerous types of health insurance; we have enumerated a few for you.
Individual Health Insurance
Individual Health Insurance provides medical expenses for an individual. It covers the cost of hospitalisation for illnesses, injuries, surgeries, etc. Individuals who are 18 or older can opt for this insurance. The premium that needs to be paid, the coverage provided, and the sum insured under the policy will depend on the terms of the policy.
Family Health Insurance
Family Health Insurance is a policy that provides medical coverage for an entire family. It provides complete financial protection to family members in case of unexpected health-related adversities, covering all healthcare costs.
Senior Citizen Health Insurance
Senior Citizen Health Insurance is a policy designed for individuals above a certain age, typically 60, to cover their healthcare expenses. It guarantees to meet the medical care requirements of elderly individuals, offering financial security and peace of mind throughout their old age journey.
Differences Between Life Insurance and Health Insurance Policies
Life insurance provides life cover to the beneficiaries if the insured person dies. On the other hand, health insurance covers the healthcare expenses of an insured person.
Life insurance has a fixed and long-term tenure. If terminated, the tenure is over. On the other hand, health insurance has a flexible tenure. An individual can renew the policy if the tenure has expired.
In life insurance, the premiums paid are typically fixed. On the other hand, the premiums paid for health insurance are both fixed and flexible.
In life insurance, individuals are eligible for tax deductions under Section 80C of the Income Tax Act of 1961 and Section 10D of the Income Tax Act of 1961. On the other hand, in health insurance, individuals are eligible for tax deductions under Section 80D of the Income Tax Act of 1961.
On a Parting Note
In conclusion, both life insurance and health insurance protect against unexpected misfortunes in life. However, they offer different benefits. Life insurance financially protects your loved ones in case of your demise, and health insurance protects you and your loved ones in case of any medical emergency. Although both play a crucial role in your life, opting for one or both depends on your financial objectives. However, it is essential to have both of these types of insurance.
