Life vs Health Insurance: Difference and Comparison

Life and health insurance insure a person against a potential unfortunate event of life loss or a health complication. However, they are poles apart based on the types of insurance policies they offer.


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To understand both terms, knowing what insurance is is essential.

Insurance is a written contract processing on a partial, fixed, total monetary premium between the person who is being insured and the service provider.

An alternative term for the service provider is the insurance agent, guarantor, or insurer. Simply put, the insured secures the lives of their family members (nominees) when they demise, while health insurance secures the insurer’s life.

Key Takeaways

  1. Life insurance is a type of insurance that pays a sum of money to the beneficiaries of the policyholder upon the policyholder’s death.
  2. Health insurance is a type of insurance that covers the cost of medical and surgical expenses incurred by the policyholder.
  3. Life insurance focuses on providing financial support to the policyholder’s beneficiaries after their death, while health insurance covers the policyholder’s medical expenses during their lifetime.

Life Insurance vs Health Insurance

Life insurance is a policy that provides financial protection for the family or dependents of the policyholder in the event of the policyholder’s death. Health insurance is a policy that covers the cost of medical expenses for the policyholder. Health insurance policies can cover a range of medical services, including doctor visits, hospital stays, etc.

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Comparison Table

Parameter of ComparisonLife InsuranceHealth Insurance
ContractThe nominee set by the insured gets a fixed amount when the insured person dies.Medical expenses covered based on the premium paid as per the policy are taken.
CoverageAvailed post-death occurrenceMedical expenses and hospitalization
Governing NormsSection 80C and Section 10(10D)Section 80D
InvestmentLong term commitmentShorter commitment and can be altered
RecoveryPost-term maturityCan be recovered, cancelled and matured

What is Life Insurance?

Life insurance is a contract sealed, signed and agreed upon by the insurer and the policy owner on the payment of a premium by the policy owner for securing the future of their family. Life insurance can also be called life cover or life assurance given to loved ones after departing the world.

Life insurance aims to secure life after the death of the breadwinner. Forbes magazine as listed the purpose of life insurance well aptly here.

Life insurance offers a death benefit to the beneficiary based on the cash value and premium incurred. Lastly, this link will offer a fair understanding of the grading, types, and plans.

Life Insurance

What is Health Insurance?

Due to the exponential upsurge of pharmaceutical companies and health-related hazards, health insurance is also something one must take to be secured in the excessively expensive privatization of the health sector.

A health insurance policy ensures safeguarding and protects families against sudden hospitalization and other related expenses.

Health insurance also entails purchasing a policy based on the needs and requirements of the person to be insured.

Understanding, reading through and purchasing an effective and easy return health policy is crucial. Health insurance covers medical expenses, doctor’s consultations, surgeries, and blood tests, depending on the policy taken.

Health Insurance

Main Differences Between Life Insurance and Health Insurance

Life insurance is governed under section 80C and section 10 (10D), and health insurance follows the regulation set under section 80D.

The governing mandates laid by the income tax department are crucial to policy creation and purchase.

Hence reading through will need the help of a lawyer. The best is to spend some monies and understand word for word of the section at concern.

Detail explanation of each section is hyperlinked below.

  1. Official Website of Income Tax Department
  2. Life Insurance : Section 80C and Section10(10D)
  3. Health Insurance: Section 80D

 Contract and Coverage

A bond is signed by the insurer, i.e. the life and health insurance provider, based on the timeline, premium agreed, fixed amount to be paid by the insurer, type of policy, tax benefits, maturity term, accidental coverage, health claims, and so much more.

There are numerous differences in the types of coverage offered, and the best is to connect with various service providers, and they select the best deal.

In life insurance, the policy owner ensures their life by paying a mutually decided premium on a monthly, quarterly or yearly bases.

After their death, the nominee receives a fixed monthly amount, securing their family’s future.

As per health insurance, the insured person can improve and avail of health benefits that cover their medical bills.

Also, just the person who takes the health policy benefits, and the policy doesn’t cover the family’s health.

Investment and Recovery

Health insurance coverage is more accessible to upscale, reduce or terminate as it is for a shorter duration than life insurance.

Also, the finances at stake with life insurance are much higher than with health insurance.

Hence the money at stake is enormous regarding life insurance, and recovery is also not possible on immediate notice.

A life insurance plan benefits the insurer more significantly due to the frozen amount of money safeguarded by the life policy owner.

The policy owner agrees not to touch their money for a decided yearly commitment of a minimum of 5 years and a maximum of 10 years.

While the money offered to the nominee can be up to a maximum of 30 years.

Health insurance can comparatively easily be upgraded, reduced coverage, or discontinued as per the governing mandates per the gubernatorial agreement.

The health policy expects an investment of a few lahks while the money at stake runs in crores to take up a  life insurance policy.

Difference Between Life Insurance and Health Insurance
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