Life and health insurance insure a person against a potential unfortunate event of life loss or a health complication. However, they are poles apart based on the types of insurance policies they offer. In order to understand both terms, knowing what is insurance is important.
Insurance is a written contract processing on a partial, fixed, full monetary premium between the person who is being insured and the service provider.
An alternative term for the service provider is the insurance agent, guarantor, or insurer. Simply put in a nutshell, the insured secures the lives of their family members (nominee) when they demise while health insurance secures the insurer’s life itself.
Life Insurance vs Health Insurance
The main difference between life insurance and health insurance is that the health insurance company provides payments for medical expenses based on the fixed premium payments by the insured while the life insurance contract gives a nominee a fixed amount when the insured dies.
Comparison Table Between Life Insurance and Health Insurance
| Parameter of Comparison | Life Insurance | Health Insurance |
|---|---|---|
| Contract | The nominee set by the insured gets a fixed amount when the insured person dies | Medical expenses covered based on the premium paid as per policy are taken. |
| Coverage | Availed post-death occurrence | Medical expense and hospitalization |
| Governing Norms | Section 80C and Section 10(10D) | Section 80D |
| Investment | Long term commitment | Shorter commitment and can be altered |
| Recovery | Post-term maturity | Can be recovered, canceled and matured |
What is Life Insurance?
Life insurance is a contract sealed, signed and agreed by the insurer and the policy owner on the payment of a premium by the policy owner for securing the future of their family. Life insurance can also be called as life cover or life assurance given to loved ones after departing the world.
Life insurance aims to secure life after the death of the breadwinner. Forbes magazine as listed out the purpose of life insurance well aptly here.
The life insurance offers a death benefit to the beneficiary based on the cash value and premium incurred. Lastly, this link will offer a fair sense of understanding of the grading, types, and plans.