And old adage goes that it is cheaper to buy insurance ten years early than one minute late. A sudden accident or an unprecedented illness can turn your life and finances a 180 degrees around. Insurance secures you against various unforeseen life events and gives you peace of mind. Plus, investing in insurance enables you to save yourself and your loved ones from feeling helpless during times of need. Now, the question many people ask is whether to get health or life insurance? Let’s understand the meaning of the two terms and compare the differences between life insurance and health insurance.

Difference Between Life and Health Insurance – The Different Policies
Health Insurance	Life Insurance
Individual Health Insurance	Term Insurance
Family Floater Health Insurance	Term Insurance with Premium Return
Critical Illness Insurance	Unit Linked Insurance Plans
Top-Up Health Insurance	Endowment Plans
Group Health Insurance	Whole Life Insurance

 

What is Health Insurance?

Medical costs are skyrocketing with every passing day. In such a situation, not having a health insurance plan can deplete your savings, accumulated painstakingly throughout life. A Health Insurance policy proves to be that lifeboat in the middle of the rough ocean, that helps you ride the waves of medical uncertainties. It covers an extensive range of costs – from pre to post hospitalisation, to hospital admission costs, doctor/surgeon charges, OPD expenses, and more.

By paying an annual insurance premium of a few thousand rupees, you can get medical coverage ranging in lakhs and crores. This coverage amount, also known as the ‘sum insured’, allows you to get the necessary medical treatment without having to bear the costs out of your own pockets. The insurer bears the majority of your medical costs.

Types of Health Insurance Policies

Here’s a look at the most common types of Health Insurance Plans:

• Individual Health Insurance

Such a policy covers the medical costs of a single insured individual, offering a specific sum insured that may only be utilised by the individual covered under the plan.

• Family Floater Plans

This type of health insurance policy typically covers all members of an immediate family unit, dividing the total sum insured amount between the insured members.

• Critical Illness Insurance

This health insurance policy is designed to cover specific critical illnesses costs. Upon diagnosis of such illnesses, the insurer pays the sum insured as a lumpsum to help you bear the expenses easily.

• Top-Up Health Insurance

To safeguard yourself from the inflating medical costs and get coverage beyond the sum insured, you can opt for a Top-Up Health Insurance plan that enhances your sum insured significantly.

• Group Health Insurance

If you are employed with a reputable company, you may be eligible for group health insurance coverage, wherein the employer pays the premiums on your behalf.

What is Life Insurance?

Life, as they say, is unpredictable. One minute, you may be in sound health, and the next, you could be in an accident that renders you permanently disabled, or worse, claims your life. As your family’s primary breadwinner, this incident could impact their survival. For instance, a physical disability may impact your ability to work and earn a monthly income that sustains your family’s livelihood. In the worst case scenario, your sudden demise, might prove financially damning for your family.

To ensure your family remains financially secure even in your absence, you can invest in life insurance. Under this policy, your insurer pays your beneficiaries or nominees the sum insured amount, enabling them to lead a financially comfortable life, without having to rely on anyone else in your absence. The insurer charges a monthly/annual premium to provide the coverage.

Types of Life Insurance Plans

Life Insurance Plans are largely categorised into the following types:

• Term Insurance

This is a type of insurance plan that you can buy for a fixed period or term – 10 years, 20 years, 30 years, etc., for instance.

• Term Insurance with Premium Return Feature

Say you outlive the 30 years term chosen for insurance; in such cases, the insurer returns the premiums you paid upon surviving the policy term.

• Unit Linked Insurance Plans

This insurance plan combines the best of both worlds – insurance and investment. Part of your premium goes towards insurance coverage, while the rest is invested in markets.

• Endowment Plans

This policy covers you against unforeseen life events. It also helps you save money and provides a lumpsum payment if you survive the insurance term.

• Whole Life Insurance

A whole life insurance plan provides lifelong (or up to the age of 100 years) coverage. In some cases, you may have to pay premiums for only 10-15 years to enjoy whole life coverage benefits.

Trivia: Insurance, as a concept has existed for over 4000 years, with Indians, Chinese and Babylonians being the first people to adopt insurance practices.

 

What is the Differences Between Health Insurance and Life Insurance?

TL; DR Points

Health Insurance and Life Insurance Differences – A Comparison
Differentiating Factor	Health Insurance	Life Insurance
Premise	Covers hospitalization, medical treatment costs, etc.	Financial protection for family in case of the insured’s death
Reason to Buy	Protects your savings from depleting due to treatment costs	Safeguards your family from financial doom in your absence
Covers Against	Financial risks associated with hospitalization	Income loss due to disabilities, and/or death
Inclusions	All kinds of medical costs per the policy agreement	Survival/death benefits upon maturity or if a claim is filed
Tax Benefits	Deductions over ₹100,000 under Section 80D and its sub-sections	Deductions up to ₹150,000 under Section 80C

 

Trivia: Did you know that the Global Insurance Market is Valued at over $5 Trillion

 

The following are the main points of differences between life and medical insurance:

• The Basic Premise

The idea behind life insurance is to safeguards your family’s financial future in case of your untimely demise. Conversely, health insurance covers the costs associated with medical treatments, hospitalisation, etc., of insured parties.

• Reasons to Buy

With life insurance, you can ensure, your family’s financial future is not impacted in your absence. With health insurance, you can safeguard your savings and seek treatment without worrying about medical costs.

• Coverage Terms

Life insurance plans cover you and your family against the risks of income loss due to disabilities, and/or death by paying a lump sum. Contrarily, health insurance covers the financial risks associated with hospitalization, especially against prolonged treatment periods.

• Inclusions

Life insurance plans include survival and death benefits when the policy matures or a claim is filed. Such benefits are not included in the scope of health insurance plans, unless specifically mentioned. For instance, your health plan can include an accidental death cover as a separate rider.

• Tax Benefits

You can claim tax deduction benefits of up to ₹150,000 per annum by investing in life insurance plans under Section 80C. With health insurance, you can claim deductions exceeding ₹100,000 under Section 80D and its sub-sections.

Health Insurance Vs Term Insurance – Which Should You Buy?

The debate surrounding the difference between medical insurance and life insurance, and what you should choose, is as old as time. However, you cannot ignore either of these investments. Both life and health insurance plans help you fulfil certain specific goals. While health insurance covers you and your family’s medical treatment costs, the pay out from life insurance ensures your loved ones do not have to financially depend on anyone else in your absence. As such, it is a good idea to invest in both.

Benefits of Investing in Health and Life Insurance Plans

Medical Insurance Benefits

• Covers your hospitalization and treatment costs like room rent, ICU rent, surgeon’s fees, etc.
• High sum insured allows you to get the best medical treatment money can buy.
• Besides allopathic treatments you can file claims for treatments covered under AYUSH.
• Medical insurance includes pre-and post-hospitalisation cost coverage.
• You can enjoy higher sums insured with the no-claims bonus benefit in health insurance plans.

Life Insurance Benefits

• Protects your loved ones financially in case of your sudden demise.
• Different policies let you save/invest in markets, while simultaneously offering life insurance coverage.
• Gives you a fixed payout in-case a life-changing incident leads to income/employment loss.
• Enables your loved ones to pay off debts accumulated by you in your lifetime, e.g., loan EMIs.
• Certain policies also allow you to get your premiums back if you survive the investment period.

Who Should Buy Insurance?

Typically, everyone should buy insurance – both health and life. However, life insurance is a must-have for anyone whose entire family depends on them for their survival. If you are your family’s primary breadwinner, you need to invest in life insurance as your untimely demise can cause your family to fall into an unpleasant financial situation. You also need health insurance, preferably with a top-up/super-top-up feature to combat the constantly rising medical costs as a result of inflation.

Trivia: Contrary to popular belief, insurance companies would much rather sanction your claim than reject it. Rejections are often rare and few and far in between.

 

Insure Your Health with Manipal Cigna Health Insurance Plans

When it comes to medical insurance, you can rely on Manipal Cigna Health Insurance as your trusted partner. Our extensive network of 8500+ hospitals nationwide, coupled with our excellent 94% cashless approval rate ensures you can start seeking treatment instantaneously. At Manipal Cigna, we offer an array of health insurance plans, designed to suit your basic to advanced coverage needs. Plus, you can buy your insurance policy online with minimal to zero paperwork. Simply visit our website to begin the process of buying your medical insurance plans.

Get the best medical care money can buy. Invest in a Manipal Cigna Health Insurance policy today.

FAQs

What should I look for when buying life or health insurance plans?

When buying health or life insurance plans, consider assessing the insurer’s claim settlement ratios and reviews. For health insurance, you must also check the insurer’s network of cashless hospitals.

How can I save costs while buying life or medical insurance policies?

If you wish to save costs while buying life or medical insurance plans, you must start investing at an early age. Your young age makes you less prone to filing claims, causing insurers to offer coverage at lower rates.

How can I pay for my life and health insurance plans?

You can pay for your life and health insurance plans, annually, as a lumpsum or in Equated Monthly Instalments (EMIs), if your insurer permits.