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Difference between Life Insurance and Health Insurance

The terms health insurance and Life insurance may seem similar as they both cover the insured person against an unforeseen and unfortunate event. But they are entirely different from each other in terms of definition and type of coverage and benefits they offer. Let us see the difference between life insurance and health insurance

Life Insurance:

Life Insurance is a contract between an insured person and an insurer (insurance company). According to this contract, the insurer promises to pay a sum of money (death benefit) to the named beneficiaries or dependents of the insured person upon his or her death and the insured person has to pay a fixed premium. Life insurance offers a way to the insured person to help his or her family members financially.

It is not a saving or investment product as its main purpose is to provide financial help to the surviving dependents of the insured person after his or her death during the length of the policy. It assures the insured person or the policyholder that his or her family or dependents can maintain their lifestyle and fulfill their needs in case of his or her untimely demise.

Health Insurance:

It is also a contract between the insurer (insurance company) and the insured person in which the insurer is supposed to cover the hospital and medical expenses of the insured person during hospitalization due to an injury, accident, or critical illness. The insured person has to pay a fixed premium at regular intervals as specified in the policy. Whenever you fall sick or met an accident you can get yourself admitted to the hospital and you don?t need to pay the high costs for being hospitalized and the following treatment.

Health insurance does not provide a death benefit, meaning there is no payout upon the death of the policyholder. A health insurance policy can be of many types depending on the benefits provided and the number of person covered in the policy. Some common types of health insurance include individual health insurance plan, family floater policy, surgery or critical illness policy, etc.

Based on the above information, some of the key differences between Life Insurance and Health Insurance are as follows:

Life Insurance Health Insurance
It is a type of insurance in which the insurance company provides the financial help or an assured sum to the beneficiaries or dependents of the insured person on his or her untimely demise, and the insured person has to pay a fixed premium. It is a type of insurance in which the insurer (insurance company) covers the all hospital expenses of the insured person during hospitalization due to injury, illness etc, and the insured person has to pay a fixed premium.
It provides death benefits. It provides treatment and medical benefits.
Money invested as a premium can be recovered on the maturity of the policy. Money cannot be recovered after the policy expires.
It is less expensive. It is comparatively more expensive than life insurance.
Common types: Term insurance, endowment plans, pension plans, money-back plans etc. Common types: individual health insurance, family floater policy, critical illness policy, pre-existing disease cover, senior citizen health insurance.
It provides tax benefits under section 80C Section 10(10D) of the Income Tax Act. It provides tax benefits under section 80D of the Income Tax Act.
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