Difference between Life Insurance and Health Insurance

2024-08-02

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Few things are as important in your life’s financial matters as life and health insurance. Life and health cover both are part of your contingency plan and should be the first two investments out of your savings.

Both the plans compulsorily serve the safety need and protect you and your family financially. However, while buying you should know which of your safety needs these plans will fulfil and which they won’t.

Life Insurance		Health Insurance
Covers the cost of your family’s survival in the case of your early demise or total disability	Coverage	Covers the cost of hospitalisation, medical treatment, and health-related expenses
The benefit amount is fixed and guaranteed for payment to your family upon meeting the coverage conditions	Amount of Benefit	The amount of benefit the insurer will pay depends upon the amount actually spent on covered treatments and hospitalization
Annual premiums are deductible under section 80C & section 10(10D)	Tax Rebate	Premium is deductible under section 80D
Max deduction in one financial year is Rs. 1.5 lakhs		Max deduction available can go up to Rs. 75,000
You can invest and grow your money to meet your future financial goals as well	Other features	This is not an investment plan. Will only protect from health-related contingencies

With these two insurance plans, you can hope to cover two costly and unpredictable contingencies for your family. Apart from this and other asset insurance, you need to maintain an emergency fund pool.

This pool will help you sail through tough economic periods of your life, such as loss of employment or business income.

How to Choose the Right Insurance Plan

Whether it is life insurance or health cover, you should choose a plan which can stay relevant for a long period. For instance, your insurance cover need will keep rising whether it is health need or life cover. Here are two things that you must consider while buying a life insurance plan:

Growing Cover

So, if you are considering a plan to help your family survive after your demise (life insurance), you should look for a term plan which can grow with you. For example, the iSelect Smart360 Term Plan from Canara HSBC Life Insurance, allows you to increase your cover amount after three crucial life events – marriage, childbirth and home loan.

Regular Income Pay Out

Similarly, you can also choose to look for a benefit payment mode. Most, term insurance plans pay the death benefit in a lump sum to your nominees. Your nominees are then supposed to wisely invest this money towards:

Meeting their regular lifestyle expenses (generate regular income)
Achieving important future goals

Investing money to generate income is easier said than done. So, why not get a term cover with the option to pay a regular sum to your nominees?

If you plan to use a life insurance plan to meet your financial goal, you should choose a plan which:

Suits your investment risk appetite
Offers adequate protection for your goal

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.