Guide
Life insurance vs health insurance
Insurance product names can be confusing. But, understanding the difference between health and life insurance is important.This guide will help you understand what each type of insurance is for. It provides an easy comparison of the two products, so you can see exactly how they differ.
After reading this guide, you should understand the difference between life and health insurance.
What is health insurance?
Health insurance provides access to private healthcare and helps cover the cost. It’s also known as private health insurance or private medical insurance (PMI).
It can cover seeing a private GP, physiotherapist, or mental health professional. It also covers treatment in private hospitals. As well as access to specialist drugs and ongoing care.
One of the main advantages of health insurance is that it gives you quick access to diagnosis and treatment. Using health insurance to pay for private treatment can help you and your family get the medical treatment you need faster.
Learn more: What is private health insurance?
What’s included with health insurance?
Health insurance typically provides access to a range of treatments. These can include:
Private GP consultations: Most providers offer virtual GP appointments, with some also providing face-to-face consultations. Also, many health insurers have a 24-hour telephone helpline for healthcare advice.
Mental health support: Access to early intervention therapies, including Cognitive Behavioral Therapy (CBT) and counseling through talking therapies.
Cancer care and support: Cover for screenings and treatments. At Vitality we also cover biological treatments and stem cell therapy.
Menopause support: One-on-one video consultations with specialist practitioners, along with access to an online hub featuring articles and resources.
Private physiotherapy: A specified number of sessions with the option to choose from an approved list of physiotherapists.
Diagnostic tests: Access to services like x-rays and ultrasound scans at private hospitals.
In-patient and day-patient treatment: Full cover for hospital and consultant fees. Out-patient surgical procedures are also included, with some providers offering at-home treatment options like chemotherapy. If you opt for eligible in-patient or day-patient treatment at an NHS hospital, Vitality provides a cash benefit of £250 per night for in-patient care (up to £2,000) or £125 per day for day-patient care (up to £500).
What is life insurance?
Life insurance gives your loved ones a cash lump sum when you pass away or if you’re diagnosed with a terminal illness. They can use the money for anything, like paying off a mortgage and funeral costs. So, although the product is called life insurance, it actually pays out when someone dies.
You can take out life insurance as a single person or a couple. And you don't need to be married or in a civil partnership to take out joint cover. You decide who receives the payout. And there’s no income tax to pay on the money they receive, so they get the whole amount.
Learn more: Is life insurance worth it?
What types of life insurance are there?
There are two basic types of life insurance. Term life insurance and whole of life insurance. There are also life insurance products packaged for specific needs. Such as, mortgage protection or over 50s life insurance. However, they all do the same job and that’s to pay out a lump sum on death.
Let’s take a look at the two main types of life insurance.
Term life insurance. This type of insurance policy covers you for a chosen number of years, which is called the ‘term’ of the policy.
If you die within your chosen time frame, say 25 years, then your beneficiaries will receive a cash lump sum. If you die after the 25 years have expired, then they won’t receive anything.
Term life insurance is often used to provide a payout if you die whilst you have a mortgage. The amount of the payout can help pay off the loan.
Whole of life insurance. This type of life insurance covers you for the rest of your life. Unlike term insurance which has an expiry date, whole of life insurance covers you until you die, as long as you keep paying your premiums.
When you die, the payout goes to your beneficiaries. This type of insurance is often used to help pay an inheritance tax bill, so the cost doesn’t need to come out of your estate.
Differences between life and health insurance
Comparing life insurance vs health insurance.
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Life insurance |
Health insurance |
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What it does |
Pays out a lump sum if you die or are diagnosed with a terminal illness while the plan is in place.
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Contributes towards or pays the full cost of private medical assessments and treatment. |
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Purpose |
To provide financial security to loved ones when you die.
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Help you and your family to receive medical treatment quickly when you need it.
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Types of cover |
Can be taken out for a fixed amount of time or for the whole of your life.
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Usually, a core level of cover plus a range of optional extras that you can add to it. |
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Length of plan |
You can choose how many years you want the plan in place for. Whole of life insurance will last for the rest of your life.
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Plans are bought for a year at a time. Each year you can review the cover you have. |
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Premiums |
Usually paid monthly. Premiums can rise depending on what options you have on your plan. |
Usually paid monthly. After 12 months, the cost of your cover will be reviewed by your provider. It will probably increase as you get older.
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Beneficiaries |
You can choose who you want to receive the payout from your life insurance.
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You can include other people on your plan, such as your spouse or children. |
Do I need life or health insurance?
When it comes to life insurance vs health insurance, both types of insurance have their purpose and benefits. They are useful in different circumstances, so you might consider taking out both types of cover.
You should consider life insurance policy if you have debts, such as a mortgage or loans. Unfortunately, debts don't disappear when you die, so your estate will need to pay them back. This means there’s less money for your loved ones which could cause financial worry.
Providing for your loved ones with a life insurance policy is one way to make sure they’re financially secure. It’s particularly important if you earn more than your partner or are a sole parent.
You may also want to leave a legacy, contribute to your funeral costs or make a donation to charity when you die. A life insurance policy can help you do these things.
A health insurance policy is there to provide access to private healthcare and help towards the cost. People take out private health insurance for many reasons, but one of the main ones is fast access to specialist healthcare. You can see a GP or specialist without having to wait long. And you’ll get fast access to treatment if you need it. Shorter waiting times can lead to earlier diagnosis and quicker treatment.
With private medical cover, you can talk to a GP at a time that suits you. You can make appointments that fit your schedule and choose where to have your treatment. Some insurers even let you choose a consultant from a list of qualified doctors. You can also choose to have treatment in a private hospital.
The NHS provides medical care in the UK for free. So, you don't need health insurance to get treatment. However, private health insurance takes away the frustration of waiting to see a GP or specialist.
Can I have both health insurance and life insurance?
Many people have both life insurance and health insurance policies in place at the same time. Both policies provide peace of mind in their own way.
Health insurance helps you get quick access to medical treatment, which can help you feel better and get back to work sooner. You can also get your family insured, so you all have access to the same medical cover.
Life insurance is there when the worst happens and you’re no longer able to provide for your loved ones. It’s a financial safety net which they can use to offset the costs of losing your income, covering the mortgage or paying for your funeral.
Why choose Vitality health insurance?
Want to know more about private health insurance or thinking about taking out a policy? Here are some of the benefits of taking out health insurance with Vitality:
- Get video GP appointment within 48 hours
- Avoid lengthy hospital waiting lists
- Get specialist drugs and treatments
- See a consultant fast
- Refer yourself for physiotherapy
- Get mental health support fast and without a GP referral
- Get menopause support
- Get discounts from top brands. And rewards for getting healthy.
Health insurance vs life insurance FAQs
Does life insurance cover health insurance?
No, the two products are separate. Life insurance only pays out when you die or are diagnosed with a terminal illness. If you want a plan that’ll pay for private healthcare, you’ll need to take out health insurance separately.
Is it good to have life insurance?
There are many benefits to having a life insurance policy. It can:
- provide a level of financial security for your loved ones,
- help pay off a mortgage or other debts,
- be used to pay an inheritance tax bill,
- pay for your funeral.
How many years should I have life insurance for?
This depends on what you’re using the policy for. If you’re using it as mortgage protection, you’ll want the policy to cover the full term of your mortgage. So, if you have a 25 year mortgage in place, then you may want to take out a 25 year policy. If you want the insurance to cover family expenses until your children leave education then you can take out a policy until they’re 21, for example. A whole of life policy will be in place until you die.
Is it better to save or have life insurance?
If you can, it’s best to do both. You’ll need some rainy day savings to help pay for unexpected breakdowns, like car expenses or a new boiler. But if you have a mortgage, it’s a good idea to have life insurance so your family don’t need to take on the mortgage payments or sell the house to pay off the debt.
Which insurance is best life or health?
Relevant guides and articles
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How does private health insurance work?
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In this guide we find out how private medical insurance works. We look at what it does and doesn’t cover and how to make a health insurance claim.
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How much does health insurance costs?
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Find out the price of private health insurance in the UK and how it’s calculated. What are the key things you can do to make sure you’re getting good value.
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Dental insurance
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Dental insurance could save you money on treatments. Read our dental insurance guide to learn how it works, what it covers and whether it’s right for you.
