Life Insurance and Health Insurance, Understand the 5 Differences!
Life Insurance — For some people, having insurance is a wise step to protect themselves and their families from unexpected financial risks. In Indonesia, two types of insurance that are commonly considered are health insurance and life insurance, which although often equated, actually have different focuses.
In choosing insurance, it is important to understand the type of protection provided, the amount of premium that must be paid, and the benefits that will be received. Therefore, you must know the difference between health and life insurance so that you can make the right decision in protecting your future and the people you love.
Understanding Health Insurance and Life Insurance
Before discussing the differences, it is important to first understand the definition of health insurance and life insurance so that you know the benefits and objectives offered by each insurance.
Health Insurance
Health Insurance is a type of insurance that provides financial protection to the insured in terms of medical treatment costs, such as hospital care costs, surgery costs, medicine costs, doctor consultation costs, and other medical costs in accordance with the provisions of the applicable policy.
There are many benefits to having health insurance, such as having easier and more affordable access to the necessary health services, provision of emergency funds if you experience health problems, so you have peace of mind because you are protected from the large financial burden due to expensive medical costs.
Life Insurance
Life Insurance is a type of insurance that provides financial protection to the insured's heirs or to the insured themselves in certain cases, such as retirement or accidents. In a contract, the policyholder (insured) pays a premium to the insurance company.
In return, the insurance company promises to provide a certain payment if the insured dies or if the insured is still alive after a certain period of time. The amount of payment given is usually determined in the life insurance contract, or it can also depend on the results of fund management by the insurance company.
Differences between Health Insurance and Life Insurance
After knowing the definition, here are some differences between health insurance and life insurance that you should know:
1. Focus of Protection
The first difference between health insurance and life insurance lies in the focus of the protection provided. The main focus of health insurance is to help reduce the financial burden borne by the insured due to hospital care costs, medication costs, and other health costs.
While the main focus of life insurance is to provide financial security in the form of cash or other benefits in accordance with the provisions of the policy to the insured's heirs so that they can remain financially sufficient after losing the family's main breadwinner.
2. Insurance Costs (Premiums)
The second difference between health insurance and life insurance is in terms of insurance costs or premiums that must be paid by the policyholder. Health insurance premiums are usually higher than life insurance premiums. This is because the risk of experiencing an illness that requires medical treatment will occur more often and can be predicted than the risk of death.
Meanwhile, life insurance premiums tend to be lower than health insurance premiums. This is because the benefits are usually only used in the event of the death of the policyholder. In addition, this insurance often has a longer insurance period, so that the risk given to the insurance company can be better distributed.
3. Policy Type
The fourth difference between health insurance and life insurance is in the type of policy offered. Health insurance is generally available in several types of policies, including:
Individual Health Insurance: This policy offers health protection for yourself, so you must pay premiums regularly in order to receive benefits from the insurance you choose.
Family Health Insurance: This policy provides health protection for all family members in one policy, and is generally more economical than buying individual health insurance policies for each family member.
Critical Illness Health Insurance: This policy provides special protection against certain critical illnesses such as cancer, kidney failure, or heart disease. When the insured is diagnosed with one of these diseases, this insurance provides direct or periodic payments, depending on the terms of the policy.
Meanwhile, in this type of insurance, the name of the insured and his heirs or beneficiaries who can claim the insurance disbursement will usually be written. Life insurance is also available in several types of policies, including:
Whole Life Insurance: A type of policy that provides protection for the life of the insured, usually the premium must be paid throughout the policy period, and the death benefit will be paid to the beneficiary when the insured dies.
Unit Link Life Insurance: A type of policy that also has an investment component. Part of the premium paid by the policyholder will be invested in an investment fund offered by the insurance company.
Dual Purpose Life Insurance: A type of policy that provides double benefits, namely payment if the insured dies or cash value and bonuses if the insured is still alive at the end of the coverage period.
Term Life Insurance: A type of policy that provides protection for a certain period of time, for example 5, 10, or 20 years. If the insured dies during the coverage period, the death benefit will be paid to the beneficiary.
4. Policy Term
The difference between the two also lies in the policy term in terms of the benefits you will receive and the continuity of the insurance protection you have. Health insurance is usually valid for one year and can be extended to continue to get protection.
On the other hand, life insurance is generally valid for life or until a specified age. Because of its ongoing nature, it provides certainty that the heirs will receive payment benefits if the policyholder dies, as long as the premium has been paid regularly and the policy remains valid.
5. Insurance Claim Requirements
The last difference lies in the insurance claim requirements. Generally, health insurance can be claimed in two ways, namely Cashless and Reimbursement. In a cashless claim, you can immediately get medical services, and only need to show your insurance card to a hospital that collaborates with the insurance company and the costs will be covered by the insurance.
However, if you use a Reimbursement claim, you must first pay the medical care costs, then submit a claim to get reimbursement. To make a reimbursement claim, you need to include documents such as a claim submission form, ID card, insurance card, and proof of payment for medical care.
Meanwhile, insurance claims must be made by the heirs after the policyholder dies. The requirements that must be met are to collect documents such as a death certificate, a copy of the policy, and identity, then fill out the claim form, attach documents, and send it to the insurance company. After verification, the claim will be disbursed.
