The difference between health and life insurance

You have worked hard for the life you love, so it’s important to understand the best way to protect it. Health
Insurance and Life Insurance are two options that you may be considering, and trying to work out if they are right
for you. Here we look at both types of insurance, how they differ and how they may work together.

What is life insurance?

Life insurance can help protect you or your loved ones financially to ensure you can keep living the life you love.

There are 4 different types of life insurance cover:

  • Life Insurance
  • Income Protection
  • Recovery Insurance (also known as Trauma Insurance or Critical Illness Insurance)
  • Total and Permanent Disability Insurance

What is health insurance?

Private health Insurance is a personal insurance that helps cover the costs of medical care. The right health
insurance product can help to cover a range of medical costs and surgical expenses. This might include
emergency requirements – like stays in private hospitals, ambulance services and time spent in intensive care – or
more everyday health expenses, like optical, dental or chiropractor appointments. Private health insurance can
help cover the cost of treatments for specific health conditions, with payments most often going directly to the
healthcare service.

If you live in Australia, you’re likely to be benefiting from Medicare, meaning that many of your health care costs
are already accounted for. However, private health insurance may provide you with more cover and allow you to
choose from a broader range of care options – sometimes resulting in faster treatment as a private patient.

What is the difference between life insurance and health insurance?

Health insurance and life insurance are different, however they can work together to protect you across a range
of scenarios.

With life insurance products, payments are made directly to you, or to your nominated beneficiary as either a
lump sum payment or ongoing monthly payments, depending on the cover you have taken out. This means you
get to choose how to spend your money and prioritise your expenses as you see fit.

Here’s a quick overview of how each of these products could support you or your family in a time of need:

Critical Illness: In the event you’re diagnosed with certain serious medical conditions or illnesses, critical illness
cover can provide a lump sum payment that gives you the freedom to manage your expenses as you see fit to
ensure you can focus on your recovery without financial stress. During recovery there can sometimes be
unexpected costs that may not be covered by Medicare or Private Health Insurance, such as some types of
rehabilitation equipment, ongoing nursing care, home modifications, living expenses and bills.

Income Protection: Income Protection gives you an alternative source of income if you are unable to work due to
an illness. This can help to keep your household up and running, and provide for your loved ones help while you

Total Permanent Disability (TPD): TPD insurance can provide a lump sum payment if you were to become
permanently disabled due to accident or illness, and are unlikely to ever be able to work again.

Life Insurance: Life Insurance provides for your loved ones in the event of your death, or if you are diagnosed
with a terminal illness. This provides you or your loved ones with a lump sum payment to help ensure financial

Should I consider health insurance and life insurance?

It’s important to consider your insurances holistically; having both health insurance and one or more different
types of life insurance (including critical illness, income protection and TPD insurance) can give you and your
family additional financial protection if something were to happen to you.

An example of the way health insurance and life insurance can work together is in the instance where an
individual is unfortunately diagnosed with cancer, and due to treatment and recovery, is unable to work for
several months.

Health insurance: Depending on your level of cover, health insurance could cover certain treatment costs, such
as hospital stays or chemotherapy.

Critical illness: A lump sum critical illness payment could help pay for advanced treatment and any out-of-pocket
expenses, such as travelling to and from hospitals and rehabilitation. It could even be used to take your loved
ones on a holiday once recovered. It’s your choice how you would choose to use this lump sum payment.

A cancer diagnosis (or health issue of another kind) can have a wide range of financial implications, and each
type of insurance can play a different role to help provide financial support for you and your family.

Health insurance alone won’t protect you and your family against lost income, or provide a lump sum pay out if
you were to become critically ill or be injured. However, these types of additional protection may be achieved
when combined with one or more of the different types of life insurance.

To ensure you’re best protected should something in your life go awry, contact us by calling our Oran Park office on 9188 1547 or emailing




The material shown in this article is for general information purposes only. It is not intended to be, nor should it be read as specific personal investment or risk advice.
Before acting on any of the information contained in this article you should obtain special advice from a specialist investment or risk professional, which is appropriate to your specific investment or risk needs, objectives and financial situation.
Whilst all care is taken in the preparation of this material, no warranty is given with respect to the information provided, and accordingly no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by RP Wealth Management.

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Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.


Level 2
351 Oran Park Drive
Oran Park N.S.W 2570

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