Difference between Life Insurance and Health Insurance

The first thing that one must do once they start earning is to buy insurance. For a secure future and to safeguard your finances one must create an insurance package. This package needs to have all the insurance policies that one can need. The four basic types of policies that your insurance package must contain are a life insurance policy, a health insurance policy, a critical illness policy and a personal accident insurance policy.

People are often confused between whether they should opt for a life insurance policy or a health insurance plan. The answer is that you need both. Both, a life insurance policy and a health insurance plan have unique functions and one simply can’t be replaced with the other.

Here’s how one is different from the other and why you need both.

What is a life insurance policy?

The need and importance of life insurance for everyone is undeniable. A good life insurance plan is an investment as well as a security. Here’s how a life insurance policy works, you pay a set premium for the duration of your policy. On maturity you receive a lump sum amount, which is the money you’ve paid as premium in case of term plans you, don’t receive a pay out on maturity. Term policies come at a low premium but in case of the death of the policyholder the nominee receives a sizable amount in the form of a claim. Your life insurance plan needs to be tailored to the needs of your family. While buying a plan one needs to take into consideration the current income, loans if any, the expenses etc. of a family. There are a few different types of life insurance plans you can choose from, they are term insurance, whole life insurance, ULIPs and child life insurance plans, to name just a few.

What is a health insurance plan?

A good health insurance plan is the need of the hour for every family. Healthcare rates all over the country are soaring. Even simple procedures, tests and diagnostics can make quite a dent in your monthly budgets. Health insurance policies make sure that you don’t have to worry about finances when you or a loved one is in need of health care. Choosing the proper health insurance plan for your family is crucial. Health insurance plans take care of your medical expenses. To maximize the benefit of a health insurance plan one can purchase riders, which are like add-ons. There is a critical illness insurance that takes care of your medical expenses in case you contract a serious illness like cancer, heart disease or organ failure. Other riders include accidental death rider and permanent disability rider.