What’s the difference between life insurance and health insurance?
It’s easy to see why people might think that health and life insurance mean similar things. After all, the two terms are closely linked. However, they refer to completely different products which offer separate types of cover.
If you’re interested in either, understanding the difference is important so that you don’t take out the wrong type of policy. So, what exactly is the difference?
Life insurance provides a lump cash sum to your loved ones when you pass away. This can then be used for anything, although it is often designed to cover payments like mortgages or living expenses due to lost income.
When you go to take out a policy, there are two main considerations. The first of these is how long you would like your term to be, which can range from a few years the rest of your life. The second will be the level of cover you want, with some people requiring far higher payouts to their beneficiaries than others. Both of these will impact your premiums, with longer, higher value policies costing more.
Unlike other types of insurance, you can stop paying and cancel whenever you want. As soon as you do this, however, your cover ends.
Whereas life insurance pays out when you die, health insurance pays out when you're alive.
It provides specialist healthcare services for a wide range of different situations. This includes access to private hospitals, treatments and drugs that might not be available via the NHS and consultation services. It can also cover costs for dental procedures, although some providers require a separate policy for this.
Generally speaking, it also means that you are able to get seen quicker, which can be an appealing option considering the NHS waiting lists for certain types of treatment.
Can you have both?
There is absolutely nothing stopping you from taking out both life and health insurance. In fact, some providers will encourage it and offer discounted rates for a bundled package. This is because it’s in an insurer's best interest to keep you from harm, and private health care is one of the best ways to do this.