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Health Insurance and Life Insurance Are Two Very Different Animals

The purpose of health insurance is to protect an individual against the possibility of having to pay large medical bills by offering either full or partial coverage for a range of medical procedures and treatments. Life insurance, on the other hand, is designed to pay out a lump sum, which is specified in the policy, in the event of the death of the policyholder.

Life insurance is normally purchased as either a whole life or term life policy. Term life insurance is the simplest form of life insurance and is also the least expensive as it pays out only on the death of the policyholder. Term life insurance can normally be purchased for as little as one year or for as long as 30 years and, in order for the policy to pay out, the policyholder must die during the term of the policy. As a general rule, individuals typically take out term life insurance towards the later years of their life or when they feel that for some reason their life is likely to be at greater risk over a short period of time.

Whole life insurance combines both a term life insurance policy and an investment plan. The premiums paid into a whole life insurance policy are divided between the two, with that part of the premium assigned for investment normally being paid into an investment vehicle, such as stocks and bonds or a mutual fund, chosen by the policyholder. Many people choose whole life insurance to provide both protection for their family and also as savings vehicle, normally for retirement. However, as these policies on usually heavily loaded with both fees and contracts they are not always a terribly suitable form of investment once costs are taken into consideration.

Although the price of both a life insurance policy and a health insurance policy are both dependent upon the policyholder's age and state to health, with younger and healthier people paying less than those who are older and in poor health, these two forms of insurance are very different animals.

For most people, despite some common misconceptions, it should not be a matter of choosing between one and the other. Both have their place and for many people it is advisable to hold both. Health insurance coverage is often provided by an employer and many employers will also offer the ability to purchase life insurance through a company scheme. In this situation, it is advisable to take up the offer of both.

If it does become a question of choosing between the two, then this should be very much a question of your own personal circumstances and how much you can afford to pay. On balance, if you can only afford one then it would probably be your advantage to choose health insurance rather than life insurance because it only takes one accident or illness to leave you facing a medical bill which you have little or no chance of being able to pay without insurance.

If you find yourself in the position of facing considerable medical bills without health insurance then one thing that you might consider is purchasing a term life insurance policy with a payout that is high enough to clear the bills. This will not of course help to pay your medical bills in the short term, but it will at least spare your family the worry of inheriting a sizable debt in the event of your death.

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