Health insurance protects the insured against incurring extensive medical expenses by offering full or partial coverage for certain medical treatments and procedures. Life insurance, on the other hand, is an insurance policy that pays out the face value of the policy, in a lump-sum payment, to the person designated as the beneficiary, upon the death of the insured.
There are two basic types of life insurance: whole life and term life. Term life insurance is by far the less expensive of the two because it offers just life insurance. A term life insurance policy can be purchased for as little as one year and for as long as 30 years. In order for the beneficiary to cash in on the policy, the insured must die sometime during the term. This is probably why so many people wait until they are older before purchasing life insurance.
Whole life insurance is a combination of a life insurance policy and an investment plan. The premium associated with the whole life policy is shared between the two with a portion going towards the life insurance premium and the balance being invested into whichever investment vehicle has been chosen: mutual fund, money market, stock and bonds, etc. The benefit of a whole life policy is that it forces the insured to save money for retirement by using a portion of the premium as investment money. In reality however, these policies are typically loaded with fees and commissions, and after taking these costs into consideration, it often is not the best use of an individual's investment dollars.
A life insurance policy is totally different from a health insurance policy and the price for each ultimately depends upon a person's age and physical well-being. In general, individuals who are young and healthy pay less than those who are older, and especially those who are older and in poor health.
It's not possible to advise a person which is better, a health insurance policy or a life insurance policy. Many people obtain health insurance through their employer, and many employers also offer as a benefit the ability to purchase a low face value life insurance policy for a nominal cost. If this is your situation, it's advisable to take advantage of both these benefits.
Otherwise, deciding which insurance policies to purchase becomes more a matter of how much you can afford each month and your personal situation. It's advisable to choose health insurance coverage, even though it probably will be more expensive because it only takes one uninsured medical illness or accident to leave you with insurmountable medical bills. Also consider this. If you don't have health insurance, and your medical bills (and/or other bills) are considerable, it might be a good idea to purchase term life insurance with a face value high enough to pay off your bills and designate your spouse as your beneficiary. That way, your spouse won't have to worry about inheriting your sizeable debt! |
