Health insurance vs life insurance • Guide • Benzinga



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Health insurance and life insurance are very different, but both are equally important to the financial well-being of a family. While paying for both can put a strain on a family budget, you’ll have peace of mind knowing your family is protected. Wondering how health insurance compares to life insurance? Use this guide to find out more.

Comparison of health and life insurance

Here is a handy comparison chart to help you better understand Medicare vs Life Insurance.

Basis of comparison Life insurance Health insurance
What is that? Financial protection for your loved ones after your death. Financial assistance for basic health care and necessary medical treatment.
Who benefits? Death benefits are paid to the beneficiary after the death of the policyholder. Cash value loans are paid directly to the policyholder. Payment for medical services can be made either to the healthcare professional or to the policyholder, depending on the insurance company.
When is the allowance paid? Upon the death of the policyholder. Loans against cash value policies are paid after the loan is processed. After the insurance company has received a request for service from the health insurance provider.
How much is the benefit? The amount of the death benefit is the amount stated in the policy. The price of the medical service provided up to the maximum service provided for each service.
How can the money be used? Whichever way the beneficiary chooses. To pay for medical care.

What does life insurance cover?

Life insurance pays a death benefit after your death to the beneficiary (ies) you designate when you purchase the policy. Families can use this allowance to pay for final expenses, daily living expenses, bills, and other types of expenses that arise after you leave.

Life insurance pays a death benefit for most causes of death, with a few exceptions, such as suicide, in the first few years after the policy is purchased. Other exceptions when the insurance company does not pay the benefit include murder of the policyholder by a beneficiary or claim fraud (found on your insurance claim when you purchase the policy).

If the policy provides for a cash benefit, you can borrow against it and use the money for any financial need that arises, such as school fees, a mortgage down payment, a large purchase like a pleasure boat, etc.

What does health insurance cover?

Health insurance helps you pay for medical treatment and preventive care for you and your family, including wellness visits, medical procedures, hospital stays, prescription drugs, medical devices, etc. However, certain types of medical procedures may not be covered by basic health insurance, such as cosmetic procedures, experimental medical treatments or the use of non-approved drugs.

Types of life insurance

Life insurance is divided into 2 basic categories, whole life insurance and term life insurance, with several variations of the whole life category, including universal life insurance and variable universal life insurance. Generally, whole life insurance is the more expensive option and offers higher levels of comprehensive coverage than a term life insurance policy.

Here is a quick overview of the different types of life insurance you can buy.

Term life insurance

A term life insurance policy covers you in annual installments, usually 10, 20 or 30 years. Term life insurance policies have no cash value. A term life insurance policy is a more affordable option for families looking for the cheapest coverage available. A good thing about most term life insurance policies is the ability to convert to whole life coverage at the end of the policy period.

Whole life insurance

A whole life policy, sometimes referred to as permanent life insurance, provides an individual with lifetime coverage and pays a death benefit to beneficiaries in addition to having a cash value benefit. The cash value earns a fixed interest rate and the policyholder can borrow against it. In addition, whole life insurance offers uniform premiums for the entire term of the policy.

Universal life insurance

If you are looking for flexible premium options, universal life insurance may be a good choice. A universal life insurance policy credits any overpayment of premiums to the cash value of the policy. Thus, there is an increasing death benefit and a fund against which the policyholder can borrow.

Indexed universal life insurance

An indexed universal life (UI) policy allows policyholders to allocate income to interest-bearing indexed accounts with a cash value that can grow. IUL income is tax-deferred. You can even use the cash value earned on an IUL policy to help make premium payments if you want to defer them for a while.

Guaranteed universal life insurance

Universal guaranteed life (GUL) policies combine parts of whole life and term life insurance policies. Coverage is age specific and is not written in number of years. The GUL policy is generally taken out for insured persons up to their 80th birthday. After that, you choose when the coverage ends.

Types of health insurance

Many types of health insurance on the market offer customizable plans to help your family stay on budget. Plus, you can find ways to control your costs. For example, you can choose a plan with higher co-payments and deductibles.

On the other hand, you can get a very basic plan covering general medical procedures up to the most comprehensive plans with low or zero deductible options which can also cover elective procedures. Some health insurance plans cover special circumstances such as the unexpected loss of your job. In this case, you can purchase short-term health insurance which usually covers you between jobs or open enrollment periods.

Here is an explanation of some of the most common types of health insurance plans on the market to help you make a more informed decision when purchasing health insurance. Each type of plan may have sub-plans with varying degrees of coverage.

Preferred Supplier Organization (PPO)

PPO plans usually have a large network of providers with many options of doctors and healthcare facilities to choose from. You can choose to see an off-grid doctor with most PPO plans, but you have to pay a higher cost for the service. On the flip side, you don’t need to commit to a primary care provider with most plans, and you can see a specialist without a referral.

Health Maintenance Organization (HMO)

An HMO enables policyholders to obtain healthcare from a local network of healthcare providers and participating facilities. You choose your primary care provider (PCP) from a list of approved network providers.

Your PCP is responsible for coordinating all of your healthcare and will refer you to a specialist if necessary. HMO plans can be cheaper, but you are limited in the sense that you have to choose a provider and network installation.

Point of Service (POS) plan

A point of service plan is a hybrid of the HMO and PPO plans. The point of sale has a smaller supplier network with a lower cost for networked services. You should always choose a primary care provider with a point-of-sale plan and get a referral if you need to see a specialist.

Short term health insurance

If you find yourself without insurance between jobs, a short-term health insurance policy can help you close the gap. explains that these policies can “provide an affordable safety net for consumers who, due to changing circumstances, may find themselves temporarily without full health insurance or unable to afford full coverage.”

Exclusive Supplier Organization (EPO)

With an EPO, you will have a network of participating healthcare providers to receive treatment. However, most EPO organizations only cover off-grid care in emergency situations. Depending on the EPO, you may or may not need to choose a PCP. Usually, these shots allow you to see a specialist without a referral.

Better health insurance options

Whatever the circumstances of your life, you need health insurance to give you access to the medical care that you and your family need. No one should be without it. Even if you think you don’t have a lot of money to spend on health insurance, there’s probably a plan you can afford. We’ve put together a list of the best health insurance companies for you so you can compare the options.

Best life insurance options

Several reputable companies that you can purchase life insurance from offer whole and term life insurance policies and all variable policy options. Don’t stress about choosing the right one. We’ve put together a list of some of the best life insurers to help you compare your options.

Protection for you and your family

Now that you know how to compare life insurance and health insurance, it’s time to get coverage. Finding the funds to pay for both health insurance and life insurance coverage can be tricky, especially if you are living on a budget. However, you don’t want to leave your family unprotected. If you do a little research and comparison, you should be able to find affordable options for both.

Frequently Asked Questions

Q. What is the best life insurance or health insurance?


Q. What is the best life insurance or health insurance?


Janet Hunt, Insurance Agent


Neither is better; Although the two are very different, both life insurance and health insurance are necessary protections that you and your family need.

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Q. Is health insurance part of life insurance?


Q. Is health insurance part of life insurance?


Janet Hunt, Insurance Agent


Medicare is not part of life insurance. Health insurance helps you pay for necessary medical care for you and your family, while life insurance helps your family pay for daily living and other expenses after you die.

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