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Brief about Health Insurance vs Life Insurance

May 30, 2022

Health Vs life insurance

Whether it’s life insurance or health insurance, if you have one of them, you will always have a definite comfort knowing that if your health takes an unexpected turn, you and your family will have a financial safety net. However, the problem arises when your funds are low and paying for both types of policies can become very challenging; and the question that you end up with is which policy you should retain, your health insurance or your life insurance. Each has its own range of benefits, and in this blog post, we will discuss which one would be better for you to continue with while the other can be dropped. But first, let’s understand how these policies meet your financial needs.

Explaining life insurance

Consider this policy as a type of a personal safe deposit box that your family members can open when you are not around. It's an agreement between the policyholder and the insurance company that in the sudden event of the policyholders' demise, the insurance company will provide a payout to their family. This will help them with their expenses and clear out due, such as their primary mortgage or pay credit card bills. The payout is known as death benefits, and generally, it's tax-free. There are two primary categories; whole life insurance offers coverage for the entire lifetime of the policyholder (you), and universal life insurance offers flexible payouts, and a part of the payment is invested in adding more cash value to the sum assured. You can choose a policy based on your needs.

Understanding health insurance

When it comes to health insurance, it is a contract between you and the insurance company to provide you with financial coverage in times of medical needs. When you have this policy, you either get the medical expenses covered, or you can submit a claim and get the costs reimbursed. The three main categories include:

  • Individual health insurance policies: can be customized for a single person.

  • Family floater health insurance policies: can be tailored to suit an entire family under one single premium.

  • Senior citizen health insurance policies: designed for Canadians who are above the age of 60.

Now that you have an idea of what these policies are let’s dive into understanding their differences.

The difference between life and health insurance policies.

Life insurance Health insurance
Life insurance policies offer coverage for the entirety of your lifespan and in the eventuality of your demise, the death benefits are paid to your beneficiary.
On the contrary, health insurance is limited to catering for your medical, hospital and surgical needs. It does not go beyond coverage for your medical expenses.
Both fixed and flexible premium options are available and some plans come with future investment value policies that offer better cash value.
Premiums are mostly fixed and the primary focus of health insurance policies is to offer coverage for expenses during emergency medical treatments. Investment is not a motive here.
Life insurance policies are long-term plans.
These are short-term plans
It offers financial protection to the family members of the policyholder if they pass away.
Health insurance offers cover for self as well as the family, to avoid any unfortunate eventuality such as death due to a financial crisis.

Would you need life insurance after you retire?

This is a difficult question to answer as it will depend on your financial situation when you retire. If you don’t face issues when paying bills and your children are self-sufficient, then you may think of not applying for one. However, with life insurance, you will always know that you can avoid a financial crisis even if you are running out of funds.

Would you need health insurance if you are young?

It’s advisable to purchase health insurance even if you are young and relatively healthy. You should know that emergencies never come with a warning sign, and accidents or illnesses can lead you to a long stay in a hospital. At least, with health insurance, you will not have to worry about costs.

The bottom line

In the end, it all depends on your choice about which policy meets your financial needs. We hope this blog has helped you decide on which policy you will buy. If you need professional help and are living in Mississauga, then you can contact InsLyf Brokerage. They are one of the leading firms in Mississauga regarding both of these policies. Schedule an appointment; they will be happy to help.