Importance of Life Insurance and Health Insurance

The sole purpose of an insurance plan is to mitigate risk and offer you financial support under any unanticipated situation. Both life insurance and health insurance policies are saviors under any unexpected contingencies. Life insurance policies offer security and financial assistance to your family members in the case of your sudden demise. On the other hand, health insurance policies protect you financially under any medical emergency. You can escape neither from health expenses nor death; hence, everyone should include a health and life insurance plan in his/her financial portfolio. Let’s take a look at the difference between life insurance and health insurance without wasting time.

Life insurance vs Health insurance

What is Life insurance?

Life insurance policies are meticulously designed so that they can support your family financially in the case of your sudden demise. A life insurance policy pays a lump sum amount (pre-decided) to the beneficiary so that the rest of the members can achieve their goals comfortably. Here are some reasons why you should go for life insurance cover.

5 Top Reasons why you should buy a life insurance cover

• Financial assistance in case of loss of income: If you are the sole earning member of your family, then in the case of your sudden demise, your family may face financial difficulties to fulfill their requirements. If the earning member purchased a life insurance policy, then the family members can ask for a death claim from the insurance company. This lump sum amount will help family members to manage their expenses comfortably.
• Make a tension-free retirement: Many life insurance companies often embrace senior citizens with intriguing pension plans. According to the terms and conditions, this plan takes care of all your post-retirement expenses. In addition, this plan offers you annuity payments on an interval basis. Thus, to lead a healthy retirement life, you should opt for a life insurance plan.
• Investment Options: Apart from offering a death benefit, a life insurance policy also provides maturity benefits to policyholders. Thus, at the time of maturity, you can avail of the money. Therefore, life insurance offers a corpus in a specific period. Moreover, if you purchase ULIPs, then your premiums will be invested in funds that invest in the share market as per your risk profile. In this way, you will get healthy returns along with life cover.
• Improve Your Savings: You are saving a certain amount from your income by paying life insurance premiums. As a result, you may earn a hefty corpus in the long term.
• Tax Savings: You can purchase life insurance policies to save your tax. Every salaried person or person in business needs to pay tax as per his/her income. By paying life insurance premiums, you can save tax up to Rs. 1.5 lakh annually.

Every person who has financial dependents should take life insurance cover to secure their life. A term life insurance is the most affordable life insurance product. To mitigate the risk of dying, every person should purchase a term insurance policy. The experts recommend purchasing a term plan that is at least 10-15 times higher than your annual income to secure the life of your family members.

What is Health Insurance Policy? 

Health insurance policies cover your expense due to a health emergency that leads to hospitalization. A health insurance policy offers expenses related to hospitalization, ambulance costs, surgery cost, post-medical care, doctor’s consultation, and many more. Therefore, you should purchase health insurance policies to deal with the below-mentioned scenarios.

• Medical Emergencies: Earlier, it was believed that older people were susceptible to various injuries and diseases. Thus, they need health insurance policies to pay off their hospital bills. But this COVID-19 pandemic has made people realize that health emergencies can happen to anyone irrespective of their age. Nowadays, youngsters are also susceptible to various fatal diseases. Medical emergencies will not only enhance your hospital bills but will also drain out your savings utterly. So, you should purchase a health insurance policy that will help you financially to get the best treatment for your ailments/injuries. If you purchase health insurance policies at a young age, your premium will be lesser. Moreover, you will finish your waiting period for the pre-existing diseases. This means you can get coverage by the time you contact those diseases.
• Healthcare Inflation: Medical expenses are rising because of healthcare inflation. If you are staying in a metro city, you need to pay a hefty amount for your healthcare expenses. Thus, you should purchase an adequate health insurance plan that offers you sufficient coverage against this healthcare inflation.
• It is more than hospitalization cover: Health insurance companies in India also offer you coverage for room rent, surgery, ambulance cost, maternity expenses, domiciliary costs, AYUSH treatments, etc. A health insurance policy offers you comprehensive coverage for all your healthcare expenses and needs.

So, in a nutshell, life insurance offers a lump sum amount to the beneficiary in case of the sudden demise of the insured policyholder. On the other hand, a health insurance policy offers all healthcare expenses to an insured policyholder. Now, you clearly understand the difference between life insurance and health insurance.

Seeing the distinct benefits of the two insurance policies, a person must incorporate these two into his/her financial portfolio. A life cover would be ideal for a person who has many dependents and has some responsibilities towards his/her family. Thus, a person should opt for a life coverage plan that adequately covers his liabilities and offers household expenses to family members. Health insurance covers medical contingencies that can hit anyone at any time and drain out your finances. 

Some life insurance companies also offer life insurance with health cover where you can pay off your medical bills using your life insurance cover.

A person should consult with financial experts to understand what type of coverage he needs to resonate with his requirements and needs.