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Life insurance vs health insurance in 2023. A complete guide.

Life insurance vs health insurance

Life insurance and health insurance have distinct purposes and are designed to cover different things.

The main objective of a life insurance policy is to provide a cash benefit to your chosen beneficiaries upon death. On the other hand, health insurance provides you with financial protection in case you become ill.

While life insurance pays out to the insured individual’s beneficiaries, health insurance pays out for the insured individual’s healthcare expenses.

Though these are common insurance types, it’s easy to get confused about the terms of each.

This guide will cover the basics of life insurance vs health insurance.

Table of contents

  • Life health insurance
  • Difference between life insurance and health insurance
  • Is life or health insurance a better choice?
  • Life insurance vs health insurance benefits
  • When should I get health insurance?
  • When should I get life insurance?
  • Life insurance vs health insurance costs
  • Life insurance vs health insurance FAQ

Life health insurance

When choosing which insurance to purchase, many people try to decide between life and health insurance.

In many cases, choosing both options might be difficult when money is tight. Moreover, there are numerous options to choose from than the standard life or health policies.

You can choose from numerous life, health, disability, and pension plans, so most people question the difference between these options.

Life and health insurance are both integral to excellent financial planning when choosing from the best insurance policies.

Life and health insurance have a unique set of benefits and certain drawbacks. Which insurance is best for you will depend on your needs.

We will examine the key differences between life and health insurance.

Difference between life insurance and health insurance

There are many differences between life and health insurance.

Health insurance protects you and your loved ones and covers the costs that arise from illness.

Standard health insurance pays for expenses such as hospital visits, GP appointments, medical tests, prescription medicine, rehabilitation, and surgery.

Health insurance will be helpful if you’re diagnosed with critical illnesses (that are specific to the policy), like heart attacks, stroke, and cancer.

However, health insurance does not include life coverage, so there is no payout if you pass away from a critical illness.

Health insurance covers medical expenses

You agree to pay the insurance company a premium when purchasing health insurance, and they agree to pay for covered healthcare expenses.

Health insurance can usually cover the following:

  • Accidents and injuries
  • Emergency healthcare
  • Prescription medications
  • Diagnostic tests and X-rays
  • Inpatient and outpatient surgery
  • GP appointments and routine checkups
  • Ongoing treatments for chronic illness or rehabilitation

Like a health insurance policy, you sign a contract with an insurance company when you buy life insurance.

If you die during the policy’s active date, your insurers agree to pay a death benefit to those you decided to be your beneficiaries.

Life insurance helps your beneficiaries recover from financial loss (if any) by releasing the death benefit after you die.

You may also be protected by life insurance from disabilities that cause an inability to work.

Life insurance is available to cover you for a specific period (term life insurance) or until your death (whole life insurance).

Life insurance pays a death benefit

As mentioned, there are two main types of life insurance: term life and permanent life.

Term life guarantees a set amount of premiums for a specified period.

Permanent life insurance typically covers you across your lifespan. Variable life, whole life, and universal life are types of permanent life insurance.

Permanent insurance is more expensive but comes with cash value accumulation.

Is life or health insurance a better choice?

There isn’t one straightforward answer to this, as life and health insurance cover entirely different things.

It’s not easy to say which is better of the two choices, but you can ask which is better suited to your needs.

In an ideal world, it’s advisable to carry both types of insurance to cover all bases and protect every area of your life from unforeseen circumstances.

Understanding each insurance type’s benefits will help you make an informed decision. You can speak with a trusted insurance agent to help you decide.

Life insurance vs health insurance benefits

Regarding life insurance, your chosen beneficiary can get the full death benefit after you pass away before you completely pay the premiums.

Many policies contain “riders” or contractual provisions that provide a portion of benefits before death.

In general, term life insurance reimburses you as much as your paid premiums if you live after a specified age.

You can invest part of your life insurance with certain policies, providing you with additional income.

Life insurance provides some tax advantages as the death benefits are generally tax-free. In addition, some policies allow a death benefit transference with fewer tax liabilities.

Some life insurance plans have a cash value that grows over your lifespan and can eventually be used to pay premiums or even put towards retirement.

Life insurance can also be customized with other coverage, such as disability insurance, if you cannot work and need to replace lost earnings.

To summarize, here are some benefits of life insurance.

Life insurance benefits

  • Paying off your mortgage
  • Certain investments can be made
  • Income replacement for the loss of salary
  • Providing education expenses for your children
  • Full death benefit payment after you pass away
  • Helping with other priorities, such as aging parents’ healthcare costs
  • Paying off other debts, such as credit cards, car loans, and student loans

Regarding health insurance, certain policies may reimburse some paid premiums even if you don’t fall ill.

Some insurance providers offer a no-claims bonus incentive as a reward for staying healthy during the period you are covered.

Some health insurance plans pay out if you are diagnosed with a critical illness.

To summarize, here are some benefits of health insurance.

Health insurance benefits

  • Financially protects you when you most need it
  • Provides expenses for hospital visits, emergencies, and medical treatments
  • May provide cover for ongoing support or rehabilitation costs
  • Pays out if you are diagnosed with a critical illness
  • No-claims bonus rewards incentives

When should I get health insurance?

Health insurance is essential coverage for some. It can help you afford medical care when you most need it without paying completely out-of-pocket costs.

Purchasing health insurance is worthwhile if you have a chronic health condition and should be considered if it’s an expense that won’t go unused.

Carrying health insurance is especially worthwhile for the following reasons:

  • If you have a family or plan to start a one
  • If you are caring for aging parents or siblings
  • If you are diagnosed with a chronic health condition
  • If you want to put your money towards extra health protection
  • If you are concerned about a health condition based on your family’s history

Generally, the most affordable option for health insurance is through an employer offering group health insurance.

When should I get life insurance?

Life insurance is a wise choice if you would like to protect your loved ones after your death.

As the breadwinner of your family’s home, life insurance will help shoulder the family’s living expenses or your mortgage costs should you suddenly pass away.

Your chosen beneficiary can use money from your policy’s death benefit however they choose.

Even if you’re fit and young and without a family, life insurance may still be worthwhile for the following reasons:

  • If you want to ensure your business partners can continue operating without you
  • If you plan to start a family and want to secure an affordable life insurance policy now
  • If you co-own a home (and mortgage) and want to protect the co-owner if you pass away
  • If you don’t want to leave your student loan debt to cosigners of the debt
  • If you’re going to provide money to cover debts and help pay for your funeral expenses

Again, one of the most affordable options for life insurance is through an employer offering group life insurance.

If you would like to know more about group life insurance, see our guide here.

Life insurance vs health insurance costs

A wide range of factors affect the cost of life and health insurance. These factors are listed below.

The following factors define the cost of life insurance:

  • Age
  • Gender
  • The required insured amount
  • Medical history (such as pre-existing conditions and previous medical operations)

The cost of health insurance is affected by the following factors.

  • Age
  • Occupation
  • The policy limits
  • Your medical history
  • Hobbies and lifestyle
  • The waiting (or ‘deferred’) period

To find the best life and health insurance, communicate with one of our specialists, who will help you compare policies from local and international providers.

Life insurance quote

The failure to have comprehensive life insurance can cause unnecessary financial suffering to those left behind.

Pitsas Insurances offer competitive life insurance packages for those wanting to protect their family or loved ones in the event of death.

Why choose life insurance with Pitsas Insurances

  • Considerable financial income for your family members
  • Coverage of expenses for your children’s education fees
  • Immediate mortgage payment coverage
  • Beneficial tax benefits and deductions
  • Save up to 25% and connect the policy with your medical insurance

To find out more about our life insurance packages, visit our website.

To obtain a life insurance quote, see here.

Health insurance quote

Pitsas Insurances is the largest provider of health insurance contracts in Cyprus.

Communicate with one of our specialists, who will help you compare health insurance policies from local and international providers.

What we offer you:

  • 35 years of insurance expertise
  • Flexible pricing to suit your budget
  • Family packages and whole-life policies
  • Great variety of local and international contracts
  • Coverage for certain pre-existing conditions
  • Access to prestigious clinics in Cyprus and abroad
  • Quick settlement of claims

To find out more about our medical insurance packages, visit our website.

To obtain a health insurance quote, see here.

Life insurance vs health insurance FAQ

Here are some frequently asked questions about life insurance vs health insurance.

Is it possible to buy life and health insurance combined?

Life and health insurance are separate and can’t be combined into the same policy.

However, some life insurance policies are available with certain healthcare benefits. You may be able to add on an accelerated death benefit rider that can help pay for chronic or terminal illness medical costs.

You may also be able to combine certain long-term care and life coverage together to help pay for certain types of healthcare.

Can health insurance cover death expenses?

In general, health insurance does not cover the expenses associated with death. As a rule of thumb, most standard health insurance covers you while you are living.

For example, your health insurance might help pay for medical expenses if you’re diagnosed with a terminal illness. Still, it won’t pay for funeral expenses or provide a death benefit to your family if you pass away.

Does life insurance cover healthcare expenses?

Life insurance is designed to insure your life and provide financial aid to your beneficiaries once you pass away.

It’s sometimes possible in very select cases to use life insurance to pay for healthcare costs.

You may be able to use some of your life insurance death benefits to pay for your medical care if you have living benefits or an accelerated death benefit rider.

However, taking funds from living benefits will decrease the death benefit amount that your beneficiaries will receive after you pass away.

You can also use your policy’s cash value or withdraw money for healthcare costs. In addition, you may be able to add on long-term care coverage to help pay for long-term care.

In all cases, these options can reduce the death benefit.

Pitsas Insurances Team

Limassol, Cyprus

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