Life Insurance vs Health Insurance

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Life Insurance vs Health Insurance

Term Insurance Quote
  • 21st Sep 2021
  • 1,302

Life Insurance vs Health Insurance

It is comforting to know that you and your loved ones have a financial safety net in case your health takes an unexpected turn. Planning ahead and saving for a rainy day is always a good idea, but sometimes it can be hard to manage different insurance policies, especially during days when the money is tight. Hence, it is important to choose an insurance policy that is going to be beneficial and easy to invest in.

When it comes to picking the best insurance policies, two particular ones that should be a part of your financial planning are Life Insurance and Health insurance. Though these terms are quite common, people often get confused regarding their varying terms and conditions. Read along to understand the basics of each policy.

Life Insurance Plans

Life insurance pays out a death benefit to the insured individual’s beneficiaries. It acts as a financial safety net for the family in case of the demise of the policyholder. The main purpose is to leave behind sufficient monetary funds to replace the loss of future income, and cover expenses like day-to-day costs, outstanding medical bills, or any other debts. It can also be used to fund saving accounts for education or spousal retirement.

Benefits of Life Insurance Plans

The two most important reasons as to why you need life insurance is that -

  • It offers financial security to your family members when you are not around to take care of their needs anymore.
  • In some cases, the money comes back to the beneficiaries tax-free upon maturity.

As per the current Indian tax laws, life insurances also offer tax exemptions. However, the tax benefits alone should not be your motivation for buying into a life insurance plan.

Health Insurance Plans

Health Insurance Plans or a Medical health insurance is limited to paying for the policyholder’s current medical expenses that can include doctor’s consultation charges, hospital stays, medical procedures, medicines, tests, etc. The premiums for life insurance policies can either be fixed or flexible, depending on the choice of plans. However, medical insurance premiums are fixed but the tenure is not, as the goal here is to offer protection, not investment.

Benefits of Health Insurance Plans

The central purpose of any kind of medical insurance plan is to ensure that -

  • You and your added beneficiaries receive the best possible medical care facilities without any stress on finances.
  • Similar to life insurance policies, health insurance plans also offer tax benefits, among other added benefits like critical illness covers, pre and post-hospitalisation expense cover, home hospitalisation cover, maternity benefits, etc.

While both types of insurance policies are essential, it is imperative that you at least get one of either of the two. Paying for health and life insurance simultaneously becomes a lot less scary when you buy the coverage you need. Those of you under the age of 30 who do not have a chronic condition may be able to avoid the latter. However, people with dependents should not avoid both these needs. Given the uncertain times that we are living in, it is better to be prepared for the future and protect yourself as well as your loved ones.

- A Consumer Education Initiative series by Kotak Life

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