I’ve said this before and I’ll say it again: Life insurance is complex. There are so many technical terms and so much information that it is incredibly easy to misunderstand, forget or even dislike the process. To make matters worse, life insurance is not the only type of insurance out there. There’s car insurance, homeowner’s insurance, travel insurance, general insurance and even pet insurance. However, the most common type of insurance that seems to get mixed up with life insurance is health insurance, two very different types of insurance. And, in everyone’s best interests, I figured that I would go through and give a brief overview of the differences between the two types.
While both types of insurance are equally important, they are important during different times of your life. Firstly, let’s talk about life insurance. Life insurance is the type of insurance that you would need after you die. You may be asking yourself, “Why would I need insurance for when I die? It won’t matter to me, I’ll be long gone.” And while that may seem like a valid argument at first, you will quickly realize that life insurance is much more important than you’d think.
Imagine that you have a child that is dependent on you either due to their age or a disability, or you have a parent or a significant other who relies on you and your income. Now imagine if one day you were to unexpectedly pass away. Your dependents would be thrown for a loop because they would have suddenly lost their income. For some of you, this is a reality. And this is exactly why life insurance exists. By owning a policy, you are ensuring that, upon your passing, your family or dependents would receive monetary compensation so that they may have, at the very least, peace of mind in terms of money.
Now that I’ve explained life insurance, health insurance should be easier to explain. Where life insurance is necessary for after your death, health insurance is necessary during your life. In essence, health insurance covers a policyholder in the event that he or she falls ill and requires minor or major surgery.
For example, let’s say you suddenly have a heart attack and require surgery. The average price for bypass surgery is $117,000. Most people do not have that amount of money lying around. Health insurance will kick in to cover the majority of that cost, leaving you to pay a much more feasible amount of the bill.
So, in short, life insurance covers your dependents upon your death, whereas health insurance covers the cost of your medical bills while you are alive. It is of the utmost importance that you have both types of policies. Make sure to get out there, ask an insurance agent about your options and get yourself covered!