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The Differences Between Health Insurance and Life Insurance

The differences between health insurance and life insurance are this; they have almost nothing in common.

Health insurance offers coverage for you, your family, or both in the event that someone gets sick, or has an accident. Health insurance pays the doctors, hospitals and nurses for your incurred medical expenses. (after you meet your deductible and co-payments)

Life insurance pays a lump some amount to a beneficiary when the insured person dies. That's it! It will not pay the doctor bills, hospital or anything else. It only pays the beneficiary/s if the insured person dies.

Now there are many options with life insurance such as "return of premium" riders and such. But the basic policy does the same thing. Pay a death benefit.

Where this all gets really confusing is when you combine the two policies. Often a health insurance company will package a health plan with a small life insurance policy.

Honestly, this is nothing more than a ploy for the insurance company to jack up the overall premium on the policy and make a bit more money. It's an add-on if you will. And no, not all health insurance plans include life insurance.

But make no mistake about it; life-insurance is not the same thing as the health insurance.

They are just packaged together in some situations. But the confusion is understandable -and this is where it comes from.

When you purchase health insurance you are purchasing a product that is intended to pay the bills to get you back to health. These services can be extremely costly which is cause for the extreme hikes in health care insurance over the last decade.

Life insurance is tied only to the death rate of a large demographic of citizens. They use the numbers of thousands of people to establish a mortality rate for each age, gender, nationality, etc. They cannot discriminate for race but believe me they know the difference on the mortality tables.

For this reason; life coverage rates are much more stable.

The life insurance policy is not paying for your health care costs. So no matter how expensive it is to get you healthy -as long as you keep making your life insurance premium payments your rates should not change. (if you have a level face term or whole life insurance policy.)

Health Events can Affect Your ability to get a Life Insurance Policy though, How does this work?

If you die due to an accident or sickness the face amount of the policy (provided you obtained insurance through a reputable insurance company and have a standard term or whole life insurance policy) will pay the proceeds to your beneficiary/s. The end. There's not much else to it.

So if you are worried that your rates will go up on your life coverage after you have had a health event, don't worry.

Summary:

Remember; you must keep your premium payments current because it is possible that after a major health event you will not be eligible for the same life coverage. You should always get insurance when you are as young as possible in the best health as possible and usually that was yesterday.

Don't do what many folks do; wait until they are in their 40's and 50's when they are thinking about life-insurance. If you have not done a great job of taking care of your health chances are you may not be able to afford a policy that will cover you -especially in your later years.

Life companies will rate you higher for poor health, or any health condition. So keep this in mind when doing your shopping. Better health equals better rates.