The Difference Between Life and Health Insurance

Life Insurance -

You have worked hard for the life you love, so it’s important to understand the best way to protect it. Health Insurance and Life Insurance are two options that you may be considering, and trying to work out if they are right for you. Here we look at both types of insurance, how they differ and how they may work together.

What is life insurance?

Life insurance can help protect you or your loved ones financially to ensure you can keep living the life you love.

There are 4 different types of life insurance cover:

What is health insurance?

Private health Insurance is a personal insurance that helps cover the costs of medical care. The right health insurance product can help to cover a range of medical costs and surgical expenses. This might include emergency requirements - like stays in private hospitals, ambulance services and time spent in intensive care - or more everyday health expenses, like optical, dental or chiropractor appointments. Private health insurance can help cover the cost of treatments for specific health conditions, with payments most often going directly to the healthcare service. 

If you live in Australia, you’re likely to be benefiting from Medicare, meaning that many of your health care costs are already accounted for. However, private health insurance may provide you with more cover and allow you to choose from a broader range of care options – sometimes resulting in faster treatment as a private patient.

What is the difference between life insurance and health insurance?

Health insurance and life insurance are different, however they can work together to protect you across a range of scenarios.

With life insurance products, payments are made directly to you, or to your nominated beneficiary as either a lump sum payment or ongoing monthly payments, depending on the cover you have taken out. This means you get to choose how to spend your money and prioritise your expenses as you see fit.

Here’s a quick overview of how each of these products could support you or your family in a time of need:

  • Critical Illness: In the event you’re diagnosed with certain serious medical conditions or illnesses, critical illness cover can provide a lump sum payment that gives you the freedom to manage your expenses as you see fit to ensure you can focus on your recovery without financial stress. During recovery there can sometimes be unexpected costs that may not be covered by Medicare or Private Health Insurance, such as some types of rehabilitation equipment, ongoing nursing case, home modifications, living expenses and bills
  • Income Protection: Income Protection gives you an alternative source of income if you are unable to work due to an illness.This can help to keep your household up and running, and provide for your loved ones help while you recover.
  • Total Permanent Disability (TPD): TPD insurance can provide a lump sum payment if you were to become permanently disabled due to accident or illness, and are unlikely to ever be able to work again.
  • Life Insurance: Life Insurance provides for your loved ones in the event of your death, or if you are diagnosed with a terminal illness. This provides you or your loved ones with a lump sum payment to help ensure financial security.

Should I consider health insurance and life insurance?

It’s important to consider your insurances holistically; having both health insurance and one or more different types of life insurance (including critical illness, income protection and TPD insurance) can give you and your family additional financial protection if something were to happen to you.

An example of the way health insurance and life insurance can work together is in the instance where an individual is unfortunately diagnosed with cancer, and due to treatment and recovery, is unable to work for several months. 

  • Health insurance: Depending on your level of cover, health insurance could cover certain treatment costs, such as hospital stays or chemotherapy.
  • Critical illness: A lump sum critical illness payment could help pay for advanced treatment and any out-of-pocket expenses, such as travelling to and from hospitals and rehabilitation. It could even be used to take your loved ones on a holiday once recovered. It’s your choice how you would choose to use this lump sum payment. 

A cancer diagnosis (or health issue of another kind) can have a wide range of financial implications, and each type of insurance can play a different role to help provide financial support for you and your family.  

Health insurance alone won’t protect you and your family against lost income, or provide a lump sum pay out if you were to become critically ill or be injured. However, these types of additional protection may be achieved when combined with one or more of the different types of life insurance. 

At TAL, we want to ensure you’re protected, no matter what happens. Having both health and life insurance in place can be a great way of covering different eventualities. Everyone is unique, so when it comes to life insurance, we believe in giving you options.

If you would like to explore our different life insurance policies, you can use our cover builder tool or find an adviser here.

Explore our different life insurance policies

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