While health insurance and life insurance policies both extend coverage to alleviate the financial liabilities of policyholders, they serve entirely different purposes.
For instance, a life insurance policy helps to account for the nominee’s financial security in the event of the policyholder’s death, whereas a health insurance policy helps cover medical-oriented expenses.
Regardless, to understand which one is best, individuals should become familiar with both insurance policies’ fundamentals.
Life insurance in a nutshell
A life insurance policy is a contract between the insured and the insurer and serves as a safety blanket for the policyholder’s family. It safeguards the insured’s family against the financial crisis or unwarranted situation in case of the policyholder’s untimely death.
A life insurance policy can come under these categories –
- Single coverage
- Group coverage
A comprehensive life insurance policy’s top benefits include financial security, tax-free pay outs, and a guaranteed death benefit.
Note that financial security is the biggest USP of this type of insurance plan. One should not decide to buy it simply to enjoy accompanying tax savings.
An introduction to the health insurance policy
Health insurance can be defined as a contract between the insured and an insurance company that extends a financial cover to account for any medical requirement. Typically, the insured is required to pay a fixed sum of money, i.e., a premium towards his/her health cover.
A medical insurance policy can reimburse the expenses incurred to avail medical treatment or account for the same on the policyholder’s behalf. Some insurance policies may also help to account for the cost of the prescribed medicine.
In a broader sense, health insurance policies can be divided into 3 categories –
- Individual health insurance
- Senior citizens insurance policy
- Family floater policy plans
- Group covers
Having an online health insurance policy comes in handy to access the best medical treatment without worrying about the resulting expenses. Such insurance plans prove most effective during medical emergencies. Some of the most attractive health insurance policy features include cashless hospitalisation, maternity benefit, pre and post hospitalisation cover, and critical illness cover.
Nevertheless, to understand which option is most-suited, individuals should become familiar with the basic differences between health and life insurance. This will help them select a suitable insurance plan like Bajaj Allianz’s health insurance policy brought to you by Bajaj Finserv without any hassles.
Difference between a health and life insurance policy
Before one decides to buy a health insurance or life insurance policy, he/she should factor in these parameters –
- Purpose
A life insurance policy provides financial coverage to the policyholders throughout their lifetime in exchange for a premium. In case of the insured’s demise, the sum assured in the policy is disbursed to the beneficiary. Alternatively, health insurance helps to cater to medical, hospital and even surgical expenses.
- Premiums
Based on the type of life insurance plan, the premium can be either be fixed or flexible. The premium for medical insurance policies is usually fixed.
- Tenor
A life insurance plan like the Bajaj life insurance policy usually comes with a long tenor. Typically, the policy term is considered terminated once the pre-defined tenor comes to an end. However, health insurance plans come with a short tenor. Policyholders tend to renew the policy annually to extend the protection cover.
- Types
Some of the most common types of life insurance policies include – term plans, wealth creation, retirement, etc. On the other hand, health insurance policies can comprise a critical illness cover or a comprehensive medical plan.
