The Difference Between Life and Health Insurance

By Employer Benefits, Inc.

October 31, 2022

One of life’s most fulfilling aspects is being able to pay for your medical costs and be sure that your family won’t suffer even after your demise. The best way to ensure that you and your family (dependents) are safe is to take a life insurance policy, health insurance coverage, or both.

Keep reading to understand the difference between life and health insurance and whether you need both or just one.

What is Life Insurance?

Life Insurance is a personal safety net designed to help relieve your family of the financial burden in case of your untimely demise. It’s a binding agreement that the insurer will pay a lump sum to the family or dependents of the policyholder in case they pass away unexpectedly. The policy aims to give your family financial continuity in case of your demise. 

There are two types of Life insurance:

Whole Life Insurance:

This type of insurance features fixed premium payouts, and the sum assured to the beneficiaries is fixed and tax-free. It’s less costly and low-risk, and you can take a loan against this policy.

Universal Life Insurance:

Although this type of life insurance provides a death benefit, it’s also regarded as an investment policy. It comes with flexible payouts, and part of the payment can be re-invested to increase the value of the sum insured. Unlike whole life insurance, universal life insurance is relatively expensive because of the exponential returns and associated risk factors.

What is Health Insurance?

Health insurance is a cover that takes care of financial burdens brought about by medical expenses arising from illnesses for you and your family. It’s a contractual agreement that the insurer will take care of medical expenses incurred when the policyholder or his family gets sick or have a medical emergency.

The three common types of health insurance include:

Individual Health Insurance:

Individual insurance policy is customized to cater to financial expenses for a single person in case of accidents, medical emergencies, illnesses, and hospitalization.

Life and Health Insurance
Individual Family Insurance Coverage Image

Family Floater Health Insurance:  

A customized policy designed to cover expenses for the entire family in case of hospitalization, accidents, illnesses, and other medical requirements.

Senior Citizens Health Insurance:

As the name insinuates, this type of health insurance covers individuals over 60 years. It covers all expenses catering to senior citizens’ physical and psychological needs. It also includes benefits, such as AYUSH, organ donation expenses, critical illnesses, and domically care.

Life and Health Insurance Cost

When it comes to life vs. health insurance, the amount you pay for each differs based on several factors. These include the plan type, age, and income level. 

In life insurance, the premiums can be fixed or flexible, based on the type of insurance cover you choose. Some life insurance plans are tied to investment value policies for significant cash value. The cost of life insurance will depend on age, overall health, gender, type, and policy terms.

In contrast, premiums in health insurance are mostly fixed. This type of insurance covers expenses incurred during medical emergencies and hospital visits. A health insurance’s motive is protection rather than investment. The cost of health insurance is determined by your age, health status, and profession


The most significant distinction between life and health insurance is the financial coverage that each policy offers.

Life insurance dispends out a lump sum to your family or beneficiaries in case you die prematurely. The idea is that when you pass away unexpectedly, there is a safety net to cover regular financial expenses and obligations you catered to when you were alive.

On the other hand, health insurance provides coverage for medical expenses in case of health complications and treatment needs. The insurer will cover the costs of medicine, surgeries, hospitalization, medical tests, and other medical treatments. It’s aimed at ensuring that you and your family can afford medical care and enjoy a healthy life.

Life Vs. Health Insurance Comparison Chart

Life Insurance

Life insurance is a comprehensive cover catering to all obligations and expenses of beneficiaries after your demise.  

Premiums can be fixed and flexible based on your insurance type.  

Life insurance is considered a long-term plan.  

Life insurance generally runs for a fixed tenure and is usually terminated after the term of the cover expires.  

The insurance cover protects families or beneficiaries if the insurer passes away.

Sometimes life insurance cover is considered an investment that pays back tax-free cash after expiry.

Health Insurance

Health insurance offers coverage for medical/hospital/surgical needs when required.  

Premiums are usually fixed.    

It is basically a short-term plan.  

Health insurance doesn’t feature a fixed tenure. Typically, the policyholder has to renew the policy annually to continue having coverage.  

Health insurance ensures that you and your family members’ medical expenses are covered in case of illnesses or medical emergencies  

No amount is paid at the end of the policy term. It only covers medical expenses incurred when the policy is active

Conclusion (Do You Need One or Both?)

Life and health insurance cover different financial obligations. While life insurance is designed to cater to your family and beneficiaries in case of your unprecedented demise, health insurance provides coverage for medical expenses for you and your family.

For this reason, you don’t need to compare them or say which one is better. Having both life and health insurance can offer a comprehensive protection plan that gives you and your family peace of mind.

Need Help?

Employer Benefits, Inc. is here to help you find the right health insurance for you. With our expertise in the field and a deep understanding of all aspects of health insurance, we can help you make sure that you’re choosing the right plan for you.

We will take care of all aspects of health insurance, including:

Health Insurance Plans: We can provide information on all types of health plans and offer guidance on which one would be best for you.

Health Insurance Quotes: We have access to quotes from many different providers, so we can provide you with quotes from a variety of options.


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