Thanks to the marketing efforts of various insurance companies, we hear about the different types of insurance available in the market. However, rarely do we understand what they protect. Today let’s understand the two most essential types of personal insurance: Life Insurance and Health Insurance.

Let’s start with the basics. Atypical life insurance cover pays out a certain sum of money to the insured or his beneficiaries upon the occurrence of a certain event (expiry of the term or death of the insured). On the other hand, a health policy provides cover against expenses that arise due to a medical emergency. This is the main difference between life insurance and health insurance.

Typically a life cover is to provide financial protection to the beneficiaries of the insured. However, today life insurance companies provide many different types of plans.

Let’s understand a few:

Whole Life Plan

Provides a risk cover to the insured against death where the financial proceeds go to the beneficiaries upon death of the policy holder.

Endowment Plan

This is a risk as well as savings plan. In case the insured dies during the tenure of the policy, the beneficiaries receive the proceeds. Otherwise, the policy holder gets the premium back along with all declared bonuses at the end of the tenure.

Money Back Plan

The policy holder receives a part of the sum assured at specified intervals. If he survives the tenure of the policy, he gets the remaining sum assured.

Term Plan

The policy holder is covered for a specified amount for a specific period. In case of death during the tenure of the policy, the dependents receive the sum assured.

Let’s understand the different plans under health insurance:


The most popular health policy, it provides financial protection against expenses due to medical emergencies resulting in hospitalization. Typically these are domestic policies, and in case you are travelling abroad, you need to purchase an Overseas Medical Insurance policy

Critical Illness

This has gained popularity recently. In this cover, the insurer makes a lump sum cash payment if the policy holder is diagnosed with any of the diseases mentioned in the policy. Typically the diseases covered are cancer, kidney failure, paralysis, and organ failure.

Though your organization may provide you with these benefits, you should purchase these policies independently. In case you change jobs, you will have no insurance cover during the time that you are unemployed. Secondly, when you retire, obtaining a cover may turn out to be difficult due to the high premium rates or refusal due to certain illnesses.

So, take matters in your own hands, so that you don’t rely on your company to secure the future of your loved ones.

Author's Bio: 

Secure your future with insurance plans from HDFC Life Insurance so that you can still live with pride when your professional income starts to ebb. You can find everything you want to know about pension plans, ULIP, health insurance, life insurance plans, and child plan at HDFC Insurance India and buy them online.