Basic Definition
Life Insurance: Provides financial compensation to beneficiaries in the event of the insured person’s death.
Health Insurance: Covers medical expenses incurred due to illness, injury, or hospitalization.
Life Insurance Focus: Protects the financial future of the family in case of death.
Health Insurance Focus: Ensures access to healthcare by covering medical treatments.
Payout Trigger (Life Insurance): The policy pays out upon the policyholder’s death or at policy maturity (for certain plans).
Payout Trigger (Health Insurance): Provides benefits when the policyholder incurs medical expenses during the policy term.
Beneficiary (Life Insurance): Family members or nominated individuals receive the payout.
Beneficiary (Health Insurance): No direct beneficiaries; the insured person benefits from coverage.
Purpose (Life Insurance): Financial security after death.
Purpose (Health Insurance): Payment of healthcare costs and reduction of out-of-pocket expenses.
Coverage and Benefits
Life Insurance Coverage: Covers the life of the insured person.
Health Insurance Coverage: Covers healthcare services such as hospitalization, surgeries, medications, etc.
Death Benefit: Life insurance pays a lump sum upon death.
Medical Bills Payment: Health insurance reimburses or pays directly for medical bills.
Type of Risk: Life insurance covers the risk of death.
Type of Risk (Health Insurance): Covers the risk of illness or injury.
Policy Term (Life Insurance): Can be a specific term (e.g., 10-30 years) or whole life.
Policy Term (Health Insurance): Usually renewable annually.
No-claim Benefits (Life Insurance): The policyholder may receive maturity benefits (in some policies) if they survive the policy term.
No-claim Benefits (Health Insurance): Some health policies offer no-claim bonuses or discounts on premiums for claim-free years.
Premiums and Payments
Life Insurance Premium: Generally based on the insured’s age, health condition, policy term, and sum assured.
Health Insurance Premium: Calculated based on the insured’s age, medical history, coverage, and policy inclusions.
Premium Payment Frequency (Life Insurance): Monthly, quarterly, annually, or as a single lump sum.
Premium Payment Frequency (Health Insurance): Usually paid annually, but can be monthly or quarterly.
Tax Benefits (Life Insurance): Premiums paid are eligible for tax deductions under specific tax laws.
Tax Benefits (Health Insurance): Premiums paid are also eligible for tax deductions, but under a different section.
Cost: Life insurance can be cheaper for younger people and costlier as you age.
Cost (Health Insurance): Health insurance premiums increase with age and pre-existing conditions.
Premium Lock-in (Life Insurance): Life insurance premiums can often be locked in for the duration of the policy.
Premium Adjustment (Health Insurance): Health insurance premiums typically increase over time.
Types of Policies
Term Life Insurance: Provides coverage for a specific period (e.g., 20 years).
Whole Life Insurance: Offers coverage for the insured’s entire lifetime.
Endowment Plans (Life Insurance): Combines life insurance with a savings component.
Critical Illness Cover (Life Insurance): A rider that pays out if the insured is diagnosed with a severe illness.
Individual Health Insurance: Provides coverage for a single person’s healthcare.
Family Floater Plan (Health Insurance): Covers the entire family under one health insurance policy.
Group Life Insurance: Provided by employers to employees as a part of a benefits package.
Group Health Insurance: Employers often provide this to cover employees’ medical expenses.
Universal Life Insurance: A combination of life insurance and investment.
Top-up Health Insurance: Provides additional coverage over and above an existing health policy.