Life insurance is a pool of policyholders sharing the financial loss of an individual’s income due to death (the main reason people buy life insurance, but there are others, like partnerships protecting each other from forced dissolution on death of one partner.) Medical life insurance.
It’s been said the insurance company is betting you’re going to “win” (live) while the policyholder is betting he/she is going to “lose” (die.) It IS a bet of sorts, just like auto insurance is “betting” you are going to have an accident. (In a manner of speaking, you win if you don’t have an accident, but you “lose” on the “bet.”)
Again, loss of income is the main reason to insure your life, because you want your beneficiaries (spouse and/or children) to continue to have that income, replaced with the insurance proceeds, on premature death.
Medical insurance is a similar but slightly different, just replacing “death” with “huge medical bills.” (And of course the policyholder is still alive.) It was originally meant to ward off financial hardship due to a catastrophic medical event (heart attack, cancer, hospitalization.) It was NOT meant to pay routine physicians’ bills.
That is, medical insurance was not to cover small “out of pocket expenses,” but only catastrophic or very high cost expenses over and above normal, out-of-pocket, routine procedures. This is why the system is failing; insurance should not cover every single thing that will ever be a medical cost. That is just paying for health care, and today everyone wants someone else (through “insurance”) to pay for their health care.
As I understand it, the change goes back to a time when labor unions could not gain higher wages during a period of wage caps — I think in the 40s during WW2 — and so they were instead offered health benefits. From there on, many employers found they could give health insurance to workers and gain a favorable tax advantage. Nowadays, almost every employer is expected to offer that benefit. That is how “insurance” moved from a true risk-sharing vehicle to an all-encompassing coverage of every possible ailment. What most people now think of as “health insurance” is simply someone else paying for all of their health care. This is a recipe for disaster because no sector of the economy can properly function if someone can use all of the services they want, the provider can charge whatever they want, and a third person is paying for all of it. That is in essence the “single payer system” and it is doomed to failure. See England’s NHS, which states its goal of starting treatment within 18 weeks! That is unheard of in the US.
When I was single, I opted for a policy which is closer to the original form of health insurance, now called “catastrophic insurance.” It carried a high deductible, which is all I needed as a healthy single person with no pre-existing conditions, no dependents, and enough income to cover routine medical care. I wanted true INSURANCE (a term not well understood I guess) to cover only high-cost unlikely events. So I paid whopping $8.00 (EIGHT DOLLARS) per pay period!
A life insurance policy
Along with that, I put a lot of money into an HSA and thereby created tax-free income, which I spent on my few medical expenses like dental and optical services, paying cash and recouping the funds through the HSA. It was an excellent plan for me.
I believe the media and liberals call catastrophic-only policies “junk insurance” without defining the term, so it is meant to scare people, I think.
Medical insurance is something which covers your medical expenses when you are hospitalised. It can be also called as Health insurance.
Whereas Life insurance is something which you are covering against your life. So, of something happens to the person who is insured and he dies, his nominee will get the money.
Simply put - Medical insurance is something which will help you when you are alive, and Life insurance is something which will help your family when you die.
There are various types of insurance present in the market. So it is easy to confuse one with the other. Health Insurance and Life Insurance both seem to be the same for many people. But they are completely different by definition and the type of coverage they offer.
Life insurance covers the insured against the risk of death. The Insurance Company agrees to pay the insured person’s nominee a fixed amount when the insured person dies.
Whereas health insurance aims at covering the actual cost towards treating illnesses/medical conditions subject to the sum assured. There is no life cover, meaning there is no payout on death.
There are many insurance providers who offer both health and life insurance with exclusive add-ons. You should research thoroughly based on your requirement and need, before buying any general insurance online or any other insurance.
As per my knowledge, the main objective behind opting for a life insurance policy is to provide life cover to the policyholder. This insurance policy ensures that the family of the policyholder maintains the same lifestyle even in his/her absence. In simple terms, it helps to reduce the financial burden on your family in case of your untimely demise. Moreover, a life insurance is must for a person who has financial responsibilities for his family.
On the other hand, medical insurance covers the actual cost towards treating medical conditions or illnesses subject to the sum assured. There is no life cover as such or we can say there is no payout on death. In other words, it covers the expenses incurred towards medical treatment.
Thus, given the distinct benefits of these two forms of insurance, an individual must aim at including both of these in their portfolio.
Besides, if you are planning to opt for an effective medical or life insurance, I would suggest you to go for Aegon Life!