How does life insurance differ from health insurance?

Life insurance primarily serves the purpose of providing a financial safety net for beneficiaries upon the death of the insured individual. The death benefit paid out to the beneficiaries can help cover expenses such as funeral costs, debts, and living expenses, allowing the family to maintain their standard of living after the loss of income. This characteristic is distinct from health insurance, which is specifically designed to cover medical expenses related to health care services, treatments, doctor visits, and hospitalization.

By focusing on the core functions of these types of insurance, it becomes clear why the distinction is crucial. Life insurance is not about managing or offsetting health-related costs during a person's lifetime; it focuses on providing support after a person's death. In contrast, health insurance is fundamentally concerned with protecting individuals from the financial burden of medical care throughout their lives, making the two types of insurance integral to a complete financial plan but serving very different roles.