subject: 3 Differences Between Health & Life Insurance [print this page] 3 Differences Between Health & Life Insurance
Many people on a day to day basis look for insurance plans that meet their lifestyle and their needs. Many questions come up though when people start evaluating health insurance and life insurance. This can be confusing for those who haven't shopped around before or are trying to find new plans. There are some major differences in coverage and what they pay for and if you don't know how to evaluate both carefully you may not get what you need out of them.
Health insurance strictly covers medical cost incurred by an illness or other event while life insurance can pay out in the event of death, withdrawal, long term injury, or just when you need the money available depending on the type of life insurance policy you have chosen. This is one of the biggest differences when looking at the type of insurance coverage you may need as time goes on. So if you get sick and you aren't permanently injured then your life insurance may not pay for your medical bill unless you die but health insurance will. The ability to get your premiums returned to you though is a factor you may want to think about.
Health insurance doesn't add to your long term equity while life insurance will if you choose the right policy type. The life insurance policies I speak of may cost a higher premium but they allow you to withdraw like a checking account while occurring interest while you pay your premium. This is great if you are just starting out and you want to build credit for yourself and improve your net worth. Health insurance doesn't give you this option though even if you don't use it.
This is seen as one of the biggest drawbacks to health insurance is the fact that if you don't get sick then you don't get anything of equity out of it. In the event that you do get sick it will cover all incurred medical cost and will save you from becoming seriously in debt. This is seen as a plus in the world of ever rising medical cost and in many ways makes it more valuable than life insurance. The drawback of not being able to get your money back out of it is seen as a minor thing in case you ever do become seriously ill.
The other difference is pay out conditions between the two. Health insurance will pay out almost always if you need treatment for an illness or injury. This excludes though things that are deemed experimental treatments or for conditions that were present before the insurance was purchased. This usually means that if you require or need some sort of special treatment then your health insurance may not pay the cost of the treatment. For many years this was common place in bone marrow transplants and still is depending on the insurance company.
Life insurance will pay out in the event of death or withdrawal if you choose the right policy. This way you can get the money you need in the event that your health insurance doesn't cover things like nursing home stays and experimental treatment. This is dependant solely on the type of insurance policy you choose because some of the types of life insurance do not let you withdrawal money from them or use them in times of need.
It's best to have a mix of coverage when it comes to health and life insurance. You shouldn't get one over the other but you should have both. The type of policy you choose though will mean more than anything when it comes time to use it so be sure to read the fine print and educate yourself on each type of life and health insurance there is available.
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