The Difference between Life and Health Insurance

Since some life insurance policies also cover medical expenses, some people are confused as to the difference between life insurance and health insurance. The main difference is their purposes or the condition under which each type of insurance will pay out.

First, let us tackle health insurance. Health insurance can protect you from the medical expenses that you need to pay in case you need medical treatment of any kind. In short, it helps you pay the bills for your hospitalization, sugery, and other medical attention that you need. Most health insurance policies cover your medical expenses, as well as that of any member of your immediate family. Most health insurance policies are provided through group policies, or as one of the benefits given by employers to employees.

On the other hand, life insurance is a wholly different matter. Its main purpose is to protect your beneficiaries from financial downfalls after your or the policyholder's death. It covers various types of expenses, all of which are connected to a person's death. First, it offers death benefits, or financial support to cover any expenses incurred by a person's death, funeral, and burial. At this point is where the confusion begins. Life insurance can also pay for medical expenses, but only if it is part of death expenses. That is, if the person, despite medical treatments, die.

In such cases, a death certificate has to be presented to the life insurance companies, in order to claim death benefits, including the payment of medical expenses. Aside from paying death benefits, however, a life insurance can also provide beneficiaries with financial support as if the policyholder hadn't died. The financial support involves lost income and payment of existing debts under the policyholder's name, if there are any. On one hand, health insurance pays out in the form of medical bills, whereas life insurance pays out at the end of the contract in a lump-sum amount. The end of the contract is the death of the policyholder.

There are similarities as well. Both types of insurance take into consideration your overall physical well-being in the calculation of rates. If you are a smoker, or if you drink a lot, or if your job is physically strenuous or dangerous, the prices of both types of insurance will surely rise.

There is absolutely no way to decide which insurance policy is more important, a life insurance, or a health insurance. The main point in the decision-making process should be your specific needs. However, fortunately, health insurance is commonly provided by companies, and in most cases, the company health insurance is already enough to cover the basic medical needs of a person, and there is no need to buy additional. Thus, this means that you only have to purchase a life insurance policy. There are also some companies who offer a low-cost life insurance policy as part of employee benefits. But unlike health insurance, life insurance policies offered by companies are not enough. It is still best to get a separate life insurance policy on your own whether or not you have a corporate life insurance policy.

Those are the differences, and some similarities as well, between life and health insurance.