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Know The Difference Between Life Insurance and Health Insurance
 

Know The Difference Between Life Insurance and Health Insurance
 


Managing uncertainties is crucial in any individual's life. If the finances are not planned to manage such events, it can affect the current lifestyle and disrupt the funds saved for the future. Although there are different ways to ensure proper financial planning, certain products are better at aiding individuals in handling such difficult scenarios by providing the necessary financial support. Life insurance and health insurance plans are two of the most preferred financial products here.

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Life and health insurance serve two different purposes. They provide financial coverage based on the occurrence of specific events in life.

There are different types of life insurance and health insurance plans. The applicability, features, terms and conditions, benefits and cost are based on the choice of the product. Understanding the difference between the two products is important to utilise these products for maximum financial benefits. Here is a detail explaining what each of these products means and their differences. 

What Is Life Insurance?


A life insurance policy is a financial agreement between an insurer and the policyholder, wherein the insurer will provide a lump sum death benefit to the policyholder's family in the event of the unexpected demise of the life insured during the policy term.

The financial benefit will help the family clear off debts, accomplish future financial goals, manage routine expenses, etc., in the absence of the policyholder, especially if the deceased was a primary earning member of the family.  In addition, the life insurance plans provide add-on rider benefits that provide additional financial support during specific scenarios, such as the policyholder being affected due to a critical illness, disability, etc., during the policy term.

Furthermore, there are comprehensive life insurance plans that provide savings and investment benefits in addition to life cover. Understanding life insurance meaning and its types is important to utilise the benefits based on the requirement.

 

Types Of Life Insurance


There are different types of life insurance plans. The choice of life insurance product should be based on individual financial needs and affordability. Here is a detail about the types of life insurance policies.

Term Life Insurance 

Term life insurance is a pure life insurance plan that provides an extensive life cover at an affordable premium. If the term insurance is purchased early in life with a long policy tenure, it becomes even more affordable.

There is also the term insurance with the return of premium option that provides a refund of the sum of all premiums paid if the policyholder survives the policy tenure.



Know More about our Best Selling Term Insurance Plan – Tata AIA Sampoorna Raksha Supreme

A Non-Linked Non-Participating Individual Life Insurance Plan (UIN:110N160V03)

Tata AIA

Sampoorna Raksha Supreme

Key Features:

  • Get Your Premium Amount~ Back  

  • Save Income Tax# Up to Rs 46,800++

  • Get Whole Life Coverage up to 100 years** of your age 

  • Increase Life Cover at important Milestones## such as Marriage or Childbirth

  • Get your claims settled under 4 hours~~

T&C apply~~

Unit Linked Insurance (ULIP) Plan

ULIP plan is a comprehensive life insurance plan that provides dual benefits, life cover and the option to invest in financial securities and receive market-linked returns@ at maturity.

The policyholder can choose the required sum assured and invest in the fund options based on their risk appetite. There are equity, debt and balanced funds for investors who can afford high, medium, and low-risk investments. The policyholders can even switch between the funds to balance the market volatilities.

Know more about our Best Selling Unit Linked Insurance Plan – Tata AIA Fortune Pro

In this policy, the investment risk in investment portfolio is borne by the policyholder. Unit Linked Individual Life Insurance Savings Plan (UIN:110L112V04)

Tata AIA

Fortune Pro

Key Features:

  • Enjoy life cover up to the age of 75

  • Our funds have been rated 4 or 5 stars1 by Morning star2

  • Investment growth with market-linked returns@ & loyalty additions3

  • 21.95% Returns4 + for Multi Cap Fund (Benchmark: 11.94%)

  • Save taxes as per applicable income tax# laws

Savings Insurance Plans

Savings insurance plans are endowment plans that provide life cover for the entire policy tenure and a guaranteed savings benefit. The policyholders can receive the maturity benefit as a lump sum, regular income, or a combination of lump sum and regular income.

Some savings insurance plans also provide regular bonus, loyalty additions, payouts, etc., during the policy term.

Know more about our Best Selling Endowment Plan – Tata AIA Guaranteed Return Insurance Plan

Individual, Non-Linked, Non-Participating, Life Insurance Savings Plan (UIN: 110N152V11)

Tata AIA

Guaranteed Return Insurance Plan

Key Features:

  • Receive Guaranteed* benefi­ts on policy maturity or in case of unfortunate Death

  • Life cover for financial protection of your loved ones

  • Guaranteed Additions^ that boost corpus year on year under Endowment Option

  • Get tax# benefits as per applicable income tax laws

T&C apply*

Retirement and Pension Plans 

Pension plans are retirement plans that help policyholders accumulate funds for their retirement and receive a regular income. Policyholders can receive regular income immediately post-retirement or after a deferred period.

Retirement plans can be guaranteed savings plans, monthly income insurance plans or annuity plans.

What Is Health Insurance?


Health insurance is a financial agreement between a health insurance provider and a policyholder, wherein the insurer will provide the necessary financial support to the policyholder in case of any health-related expenses. Therefore, it is a protective cover against medical expenses related to accidents, injuries, and illnesses.

In addition, certain health insurance plans provide coverage against pre-hospitalisation and post-hospitalisation expenses. Furthermore, the policyholders can benefit from the cashless claims or the reimbursement benefits in some of the best hospitals throughout the country.

Different add-on covers enhance the financial benefits received under the health insurance plan. In addition, with the advent of information technology, policy seekers can access the different types of health insurance policies online, compare the best among them and choose the best policy that will suit their financial needs.

Health insurance plans are important in the current era considering the changing lifestyle that can increase the probability of getting affected due to diseases and rising medical costs. In addition, it provides cashless treatment or reimbursement options in some of the best hospitals throughout the country.

Different Types of Health Insurance Plans


Different types of health plans provide a range of benefits based on the requirements.

  • Flexible premium payment options - Highlights of Tata AIA Life Insurance Sampoorna Raksha Supreme
    Individual Health Insurance

    Individual health insurance is a health insurance plan that covers the medical expenses of the individual policyholder. A person can purchase individual health insurance plans for every family member. 

  • Lower Premium Rates for Women - Highlights of Tata AIA Life Insurance Sampoorna Raksha Supreme
    Family Health Insurance

    A family health insurance plan covers the medical expenses for the entire family. The plan will have a high sum assured to ensure adequate coverage for every family member.

  • Death Benefit Pay-out - Highlights of Tata AIA Life Insurance Sampoorna Raksha Supreme
    Senior Citizen Health Insurance

    A senior citizen health insurance plan provides health insurance benefits for individuals above 60 years of age. It provides the health cover to provide the financial support to manage age related issues, major or minor illnesses. 

  • Flexibility to Choose Plan Option - Highlights of Tata AIA Life Insurance Sampoorna Raksha Supreme
    Super Top-Up Health Insurance

    A super top-up health insurance plan provides additional features and covers to enhance regular health insurance plans. 



Understanding The Difference Between Life Insurance and Health Insurance


Understanding the difference between the life and health insurance plans is necessary to compare the features and benefits to decide on the most appropriate solution.

Life Insurance vs Health Insurance

Factors

Life Insurance

Health Insurance

Financial cover

Life insurance provides a life cover that offers a lump sum death benefit to the policyholder's family in the event of their unexpected demise.

Health insurance provides financial cover for medical expenses incurred due to an illness, accident, or other injuries.

Range of benefits

Life insurance has a wider scope, including savings, investments, medical benefits, and life cover.

Health insurance benefits are restricted to managing medical expenses and do not include life cover, savings, or investment benefits.

Policy tenure

Life insurance plans are generally purchased for the longer term. However, if the policyholder meets with an unexpected demise, the policy terminates before maturity, subject to the policy terms and conditions.

Health insurance plans have a short policy tenure and are generally renewed annually based on the policyholder’s medical conditions and financial needs.

No claim bonus

Life insurance plans do not provide the ‘No claim bonus’ benefit.

Some health insurance plans provide the ‘No claim bonus’ benefit wherein the policyholder will receive a discount on the future premiums payable or an increase in the sum assured if they made no claims in the current year.

Return on investment

Some life insurance plans offer the return of premium benefits that refunds the premium paid at maturity. There are also savings and investment benefits that help the investors accumulate or increase wealth for their future.

There is no defined return on investment. The policyholder will be entitled to receive financial support in the form of cashless or reimbursement claims for medical expenses.

Survival benefits

Some life insurance plans provide a maturity benefit, such as the savings insurance plans that provide guaranteed returns at the end of the policy tenure or the ULIP policy that provides market-linked returns at maturity.

There are no survival benefits in a health insurance policy. However, it provides the necessary financial assistance during the policy tenure.

Rider options

Life insurance provides rider^^ options to enhance the financial benefits. For example, the rider for critical illness provides additional funds for managing the medical expenses for treating a critical illness, the rider for disability waives of paying the future premiums.

Health insurance policies provide add-on options or riders for enhancing the coverage, including additional covers, etc.,

Tax benefits

Investments made in life insurance qualify for a tax# deduction and tax exemption under Section 80C and Section 10(10D) of the Income Tax Act 1961.

Investments made in a health insurance policy for self-including the family and parents will qualify for the tax deduction benefit under Section 80D of the Income Tax Act 1961.


Benefits Of Life Insurance and Health Insurance


Life insurance and health insurance provide a range of benefits. As these financial products are flexible, policyholders can analyse the benefits and choose the most suitable product to satisfy their financial needs.


Benefits Of Life Insurance in India
 

  1. Life insurance provides a financial cover that will provide a lump sum death benefit to the policyholder's family in the event of their unexpected demise.
  2. The death benefit helps the family manage their routine expenses, clear off debts, etc.,
  3. Life insurance plans provide add-on rider options, such as riders for critical illness, disability, etc. For example, the rider with the critical illness benefit provides additional funds to manage the medical expenses in case the policyholder is affected due to a critical illness such as cancer.
  4. In addition to life cover, the benefits of a life insurance policy extend to providing savings and investment benefits.
  5. Life insurance plans are flexible. For example, investors can choose the premium paying mode and frequency.
  6. Investments in life insurance can be made for the long term.


Benefits Of Health Insurance in India
 

  1. Health insurance provides the necessary financial support for managing the medical expenses of the policyholder in case of illnesses, injuries, etc.,
  2. One of the most important benefits of health insurance policy is that it offers cashless treatment or reimbursement options in some of the best hospitals throughout the country.
  3. Different types of health insurance plans, such as individual health insurance, family health insurance, etc., help customise the features based on the family's financial needs.
  4. Health insurance plans provide add on riders to enhance the benefits of regular plans.

Frequently Asked Questions

Do I need both life and health insurance?

Life insurance and health insurance serve two different purposes.

Life insurance provides financial cover to secure the family of the policyholder in the event of their unexpected death. Health insurance provides financial assistance to manage the medical expenses of the policyholder due to an injury, illness, etc.

Therefore, the need for life insurance and health insurance will depend on the individual family's financial needs.

Does life insurance pay medical bills?

Life insurance with a specific rider option, e.g., Critical Illness benefit option provides additional financial benefits if the policyholder is affected due to major illnesses or minor injuries. These additional funds can be used to pay for medical bills. 

What is whole life insurance?

A whole life insurance plan provides the life cover benefit for the policyholder until death, provided the premiums are paid completely based on the policy terms and conditions. Tata AIA Life Insurance Sampoorna Raksha Supreme (A Non-Linked Non-Participating Individual Life Insurance Plan (UIN:110N160V03) provides whole life cover up to 100 years** of age. 

What is a health insurance policy?

Health insurance is a financial agreement between a health insurance provider and a policyholder, wherein the insurer will provide the necessary financial support to the policyholder in case of any health-related expenses. 

Disclaimer 

  • The complete name of Tata AIA Sampoorna Raksha Supreme is Tata AIA Life Insurance Sampoorna Raksha Supreme (UIN:110N160V03) - A Non-Linked Non-Participating Individual Life Insurance Plan
  • The complete name of Tata AIA Guaranteed Return Insurance Plan is Tata AIA Life Guaranteed Return Insurance Plan - Individual, Non-Linked, Non-Participating, Life Insurance Savings Plan (UIN:110N152V11)
  • The complete name of Tata AIA Fortune Pro is Tata AIA Life Insurance Fortune Pro - Unit Linked Individual Life Insurance Savings Plan (UIN: 110L112V04)
  • *The benefits under the plan are Guaranteed and may be a % of the Annualised Premium or Total Premiums Paid based on the plan option selected. Please refer Brochure for more details.
  • ^Guaranteed Addition defined as a percentage of GMB shall accrued at a simple rate for each completed policy year, throughout the Policy Term and shall be payable on Maturity or Death whichever is earlier, subject to all due premiums being paid. GA shall accrue @ 5% of GMB.
  • #Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfillment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere on this site. Please consult your own tax consultant to know the tax benefits available to you.
  • @Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.
  • ~Under Life Plus Option, an amount equal to the 105% of the Total Premiums Paid (excluding loading for modal premiums) shall be payable at the end of the Policy Term, provided the life assured survives till maturity and the policy is not terminated earlier.
  • ++Tax benefits of up to ₹46,800 u/s 80C is calculated at highest tax slab rate of 31.20% (including cess excluding surcharge) on life insurance premium paid of ₹1,50,000. Tax benefits under the policy are subject to conditions laid under Section 80C, 80D,10(10D), 115BAC and other applicable provisions of the Income Tax Act,1961. Good and Service tax and Cess, if any will be charged extra as per prevailing rates. The Tax-Free income is subject to conditions specified under section 10(10D) and other applicable provisions of the Income Tax Act,1961. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
  • **Applicable for specific plan options. Please refer brochure for additional details.
  • ##Applicable for specific plan options. Please refer brochure for additional details.
  • 1on a 5-year basis as of September 2022.
  • 2©2020 Morningstar. All rights reserved. The Morningstar name is a registered trademark of Morningstar, Inc. in India and other jurisdictions. The information contained here: (1) includes the proprietary information of Morningstar, Inc. and its affiliates, including, without limitation, Morningstar India Private Limited (“Morningstar); (2) may not be copied, redistributed or used by any means, in whole or in part, without the prior, written consent of Morningstar; (3) is not warranted to be complete, accurate or timely; and (4) may be drawn from the data published on various dates and procured from various sources and (5) shall not be construed as a n offer to buy or sell any security or other investment vehicle. Neither Morningstar, Inc. nor any of its affiliates (including, without limitation, Morningstar) nor any of their officers, directors, employees, associates or agents shall be responsible or liable for any traducing decisions, damages or other losses resulting directly or indirectly from the information
  • 3Loyalty Additions will be credited only if Policy is in-force and all due premiums have been paid. For Regular Pay & Limited Pay, additional units @ 0.20% of units in each of the funds under Regular Premium Account will be credited (post deduction of applicable charges) to the respective funds every Policy Anniversary starting from eleventh (11th) Policy Anniversary till end of Policy Term. For Single Pay, additional units @ 0.35% of units in each of the funds under the Single Premium Account will be credited (post deduction of applicable charges) to the respective funds every policy anniversary starting from sixth (6th) Policy Anniversary till end of Policy Term. Loyalty Additions are not payable on Top-up Premium Account.
  • 45-year computed NAV for Multi Cap Fund as of September 2022. Other funds are also available in Tata AIA Life Insurance Fortune Pro.
  • ~~Applicable to only non-early claims with more than 3 years of policy duration, non-investigation cases, up to Sum Assured of Rs. 50 Lakh. Applicable for branch walk in. Time limit to submit claim to Tata AIA Life Insurance is 2 pm on working days. Subject to submission of complete documents. Not applicable for ULIP policies and open title claims.
  • Buying a Life Insurance policy is a long-term commitment. An early termination of the policy usually involves high costs, and the Surrender Value payable may be less than all the Premiums Paid.
  • This product is underwritten by Tata AIA Life Insurance Company Ltd. This plan is not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • Insurance cover is available under this product.
  • In case of non-standard lives and on submission of non-standard age proof, extra premiums will be charged as per our underwriting guidelines.
  • All Premiums, Charges, and interest payable under the policy are exclusive of applicable taxes, duties, surcharge, cesses, or levies which will be entirely borne/ paid by the Policyholder, in addition to the payment of such Premium, charges or interest. Tata AIA Life shall have the right to claim, deduct, adjust, and recover the amount of any applicable tax or imposition, levied by any statutory or administrative body, from the benefits payable under the Policy.
  • For more details on risk factors, terms, and conditions, please read the sales brochure carefully before concluding a sale.
  • Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policy holder will not be able to surrender/ withdraw the monies invested in Linked Insurance Products completely or partially till the end of the fifth year.
  • Tata AIA Life Insurance Company Limited is only the name of the Insurance Company & Tata AIA Life Insurance Fortune Pro is only the name of the Unit Linked Life Insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns.
  • The fund is managed by Tata AIA Life Insurance Company Ltd.
  • Past performance is not indicative of future performance. Returns are calculated on an absolute basis for a period of less than (or equal to) a year, with reinvestment of dividends (if any).
  • Investments are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisor.
  • Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. Please know the associated risks and the applicable charges, from your Insurance Agent or Intermediary or Policy Document issued by the Insurance Company.
  • Various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. The underlying Fund's NAV will be affected by interest rates and the performance of the underlying stocks.
  • The performance of the managed portfolios and funds is not guaranteed, and the value may increase or decrease in accordance with the future experience of the managed portfolios and funds.
  • Premium paid in the Unit Linked Life Insurance Policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the Insured is responsible for his/her decisions.
  • This publication is for general circulation only. This document is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. This document is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your insurance agent or the Intermediary or policy document issued by the insurance company and this document is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • L&C/Advt/2023/Jan/0228
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