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The Difference Between Life Insurance and Health Insurance


There's quite a difference between Life Insurance and Health Insurance, and it's important to know what you pay for and what you get. Sometimes you see life insurance and health insurance lumped together because of the fact that they both insure the person (rather than the car, the house, etc). The difference is that if you insure your health, with health insurance, then if you become ill then the insurance company pays for your medical treatment, whereas with life insurance, if you die then the insurance company pays your nearest and dearest and those who depend on you. They can't replace you, but they can provide financial help to cover the losses incurred because of your absence. If you have a job that pays a salary then in the case of a life insurance claim the insurance company pays so your family aren't left in shtuck.

To draw a vehicular analogy, life insurance is like the type of car insurance where you're covered in case the car is written-off, for example by going off a cliff, where the insurance company pays out the value of the car. In contrast, health insurance is more like the type of car insurance known as car breakdown recovery where various motor ailments are covered.

Some insurance companies offer both health insurance and life insurance on the same policy, but you need to ask them what's really covered and what isn't. Also, it's worth knowing that life insurance is sometimes not so much an insurance policy against eventuality, but more of an investment, like a long term savings account or savings plan. Some of these have tax advantages.

Anyway, here are the categories:

Health Insurance - covers your medical expenses if you get ill.

Life Insurance - covers your family against financial hardship in case you die.

Shop around and insure wisely.

Incidentally, I have noticed that quite a lot of pages online at the time of writing this page on the subject of the difference between health insurance and life insurance seem to be using the same text as each other. I hope they've got it honestly and not pinched it from one-another (plagiarism)! Please note that this page is copyright (C) Zyra and is not to be copied without permission. You can link to it, and/or recommend it on DIGG if you like. The pages at Zyra's website are made to help people out there on the Net and to improve the nature of Zyra's website. In this case, it's the insurance companies page which is being improved and helped.

It may sound obvious, but if you die, life insurance doesn't replace you in a "new for old" fashion. In a way you are more like the Insurance of Sentimental Items, although maybe with Cryonics you could be resurrected if you can afford it.