Buying insurance is never an easy process and with so many types of insurance products available, choosing the right one can be confusing.  This guide is meant to explain the differences between health insurance and life insurance in order to help you choose the right insurance product for you and your loved ones.

What is the main difference between health insurance and life insurance?

Health insurance will help you get access to private healthcare in case you or family members unexpectedly fall ill by paying all or part of your medical bills, whereas life insurance will pay out a cash lump sum in case of your death to help minimize the financial impact on your family.

While both products are meant to help you look after your family’s finances, they are different products designed to protect you against different financial risks – needing medical help (health insurance) vs death (life insurance).

What is health insurance?

Health insurance, also referred to as private medical insurance, is a policy that will help you pay for your private healthcare costs. Health insurance is a great way for individuals and families to bypass the NHS waiting lists and get treated in a private hospital.

The medical conditions and benefits you are covered for and the amount you can claim are determined by the medical insurance policy you have. As a rule of thumb, the more comprehensive (and expensive) your policy is, the more flexibility you have when it comes to claiming on your private medical insurance. But this doesn’t mean that a more limited plan can’t be useful. It all depends on your personal needs and what you are looking for from your health insurance plan.

How can health insurance help me?

The benefits of medical insurance can vary based on the type of policy you have. Nevertheless, the main role of medical insurance is to pay for your medical bills (fully or partly) when admitted to a private hospital to treat an unexpected, acute condition. Therefore, all health insurance plans can help you:

  • Access private treatment without having to worry about expensive private healthcare fees.
  • Get fast access to treatment.
  • Enjoy privacy and comfort in your own private hospital room.
  • Access additional treatments and drugs that are not available on the NHS.
  • Have more control over your healthcare by being able to choose a hospital and a doctor (sometimes from a list) for your treatment and a time that suits you.

A more comprehensive health insurance policy can provide you with additional health benefits such as:

  • Cover for outpatient and day-patient treatment. This means you can claim for hospital appointments that don’t require you to stay in hospital overnight.
  • Dental benefit allowing you to get refunds for your dental check-ups and treatments.
  • Optical benefit allowing to claim money back for new prescription glasses.
  • Other useful benefits such as mental health cover, physiotherapy and alternative therapies.

What is life insurance?

Life insurance is a type of insurance that individuals buy in order to financially protect their loved ones in case they pass away. This means that in the event that the policyholder dies, their nominated beneficiaries will receive a pay out to help them stay financially secure.

To benefit from cover, similarly to health insurance, you have to pay a monthly or annual premium. The amount of premium you pay depends on your individual circumstances, the policy you choose and the amount of cover you require.

There are usually 2 types of life insurance – one that covers you for a certain period (fixed term) and one that covers you for the rest of your life (whole of life). When choosing which one to get, you should take into consideration your finances and family circumstances and what you are wishing to cover.

How can life insurance help me?

There are different reasons why a person might want to take out life insurance, including helping your partner or family pay off a mortgage or wanting to provide for your children while they are still growing up in case the unexpected happens.

With a fixed term life insurance, there is no pay out if your term expires before you die. However, if you want to leave an inheritance or help your family with your funeral costs, a whole-of-life-insurance could be an option.

Choosing what to buy

Health insurance and life insurance are distinct products and they are both meant to protect your family for different life events. The table below highlights the main differences between health insurance and life insurance to help you decide what to buy.

Health InsuranceLife Insurance
Health insurance is designed to cater for your medical needs by paying your private hospital bills when getting treated for unexpected, acute conditions.Life insurance is designed to provide peace of mind throughout a set term, knowing that your family will receive a lump sum in the event that you die.

Usually, private medical insurance will pay the hospital directly, therefore private medical insurance can’t help you with other expenses which are not medical.
Life insurance will pay your beneficiaries who can use the pay out how they want, whether it’s for paying out a mortgage, funeral costs, bills or other expenses.
You can claim on your health insurance every time you use a benefit that is covered under your policy.Life insurance pays out just once at the end of your life, but it may not pay out at all if it’s a term policy and you don’t die.
Medical insurance doesn’t cover chronic conditions and terminal illnesses.Life insurance might pay out if you are diagnosed with a terminal illness.
A health insurance contract lasts 12 months but you can renew it every year.Life insurance is a long-term plan lasting anything from 10 years to your entire life.
Health insurance can protect yourself as well as your partner and children.Life insurance is mainly designed to protect your nominated beneficiaries in the event of your death.
Medical insurance premiums can’t be recovered unless you make eligible claims on your policy.Life insurance policies can be a bit more complicated and it’s best to discuss with a specialist adviser and check the terms of your policy.

We hope that you have a better understanding of the differences between health insurance and life insurance after reading our guide. If you prefer to have a discussion with an insurance expert, our specialist team is here to help you decide if a private medical insurance policy could benefit you and how to find the right cover.

Looking for tailored advice?

Request a call back below and we’ll be in touch to advise you.

Please note that UK Health Insurance does not sell life insurance, but we can explain the differences between life insurance and health insurance and help you get health insurance cover if you decide this is appropriate for you.