What is the difference between health insurance and life insurance?

Mar 28, 2022

Australians are lucky to have one of the best public health care systems in the world. However, the pandemic has placed significant pressure on a system that was already stretched, hence relying on it may result in long wait times for non-life-threatening procedures, such as a hip replacement or cataract operation.

Generally, public health via Medicare covers costs such as visits to your GP, diagnostic tests, treatment and accommodation in public hospitals and some prescription medications under the Pharmaceutical Benefits Scheme.

Nearly 50% of Australians opt for private health insurance1 and the vast majority of Australians have some form of life insurance (usually built within their superannuation fund) but less than 40% are adequately covered.

Private health insurance is a personal insurance that helps cover the costs of medical care.

This includes medical care that is not covered by Medicare such as stays in private hospitals, ambulance services or more everyday health expenses, like optical, dental or chiropractic care. Private health insurance can help cover the cost of treatments for specific health conditions, with payments most often going directly to the healthcare service.

Life insurance can help protect you or your family financially in the case of serious illness, injury or death. There are 4 types of life insurance cover:

· Life Insurance

· Income Protection

· Trauma Insurance

· Total and Permanent Disability (TPD) Insurance

You may be considering the option of choosing between private health insurance and Life Insurance, however there are benefits in having both as they have two very different purposes.

Is private health insurance or life insurance best for me?

Everyone has differing circumstances and needs and private health insurance is encouraged by the Federal Government who offer rebates at tax time in certain cases. If you are at an age where your income is high and you have a lot of expenses to cover, you may consider adding income protection insurance which will provide peace of mind if you have a serious illness or injury rendering you unable to work for a period of time.

Private health insurance and life insurance are very different; however, they can work together to protect you across a range of scenarios:

Critical illness – If you’ve been diagnosed with a serious medical condition, critical illness can be covered by Trauma Insurance via a lump sum payment that gives you the opportunity to manage your medical bills and other general living expenses. It also provides peace of mind for you to focus on your recovery without the financial stress. During this period there may still be some options that are covered by your private health insurance, so check that first and leave the lump sum for anything not covered.

Unable to work – For many, your ability to earn an income is your greatest asset. Income Protection Insurance provides you with a portion of your income if you are unable to work due to an injury or illness. This can be a massive relief at a very stressful time, by continuing to cover your household bills, financial commitments, and general costs of living. You can still use your private health insurance for the extras you may need during your recovery from your injury or illness such as physio, chiro or other rehabilitation services – you will need to check with your health insurer as to what you are specifically covered for.

Total Permanent Disability – TPD insurance provides a lump sum payment if you become permanently disabled due to accident or illness which renders you unable to work again. This would help if you needed to make some alterations or adjustments to your living quarters such as making it more accessible.

Death – Life Insurance is a safety net that provides for your family in the event of your death or if you are diagnosed with a terminal illness. This comes in the form of a lump sum payment which can be used at the discretion of your family.

What are the benefits of having both life insurance and private health insurance?

It is important to consider your insurances holistically. Having both private health insurance and one or more options of life insurance can give you and your family additional financial protection if something were to happen to you.

While private health insurance gives you a range of benefits allowing you to maintain your health, life insurance is more about the unexpected.

A major benefit of life insurance is that the payments are made directly to you or your nominated beneficiary as either a lump sum payment or in instalment payments rather than directly to the medical professionals. This allows you to choose how you need to disperse the money and prioritise your expenses.

Combining both private health and life insurance gives you flexibility and cover for what you need when you most need it especially in the case of unexpected illness or injury.

No matter what stage of life you are at, it is important to check your insurances and ensure you are not under insured. Contact Tribel Advisory to get a better view of your holistic financial situation and well-being and be assured that you will be covered should an unexpected health emergency occur.

All of the material published on this web site is for information purposes only and does not constitute advice. This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a Financial Adviser, whether the information is appropriate in light of your particular needs and circumstances

Key person protection

Ownership protection

Employee protection

Working with our planners

Engagement process

Cashflow management

Debt management

Wealth management

Personal risk management

Retirement readiness

Estate planning

Our Philosophy

Our History

Our Solutions