Health Insurance = Life Insurance ?

In my course of work, I have often come across clients who claim they have insurance. It is the first intuitive response of most people to say this when they meet an adviser. When probed more closely, it is often not surprising to find that most do not have an idea of what they are covered for.

One of the most common misconceptions people have is to think that life insurance will cover hospital bills. Yes it is possible to use some of the money one receives from a life insurance claim to pay for your hospital bills but what happens if one should admit into the hospital and does not qualify for a life insurance claim?

This is a recent case I dealt with. Mr Q had always thought he had himself covered for hospital bills as he had clearly instructed his agent to prepare a policy to cover this aspect besides his normal life insurance. Mr Q deserves praise for taking active steps to ensure he is protected against hospitalisation risk.

However, it turns out Mr Q only had two life insurance policies in the end. One of the policies had a small sum of medical reimbursement of $5,000. In today's day and age, $5,000 can hardly be considered sufficient for a surgery.

This meant that unless Mr Q should pass on or be struck with total and permanent disability or one of the 30 critical illnesses, Mr Q would NOT be able to claim hospital expenses. The only exception was if he met with an accident which would pay $5,000 from the medical reimbursement aspect.

There are many types of insurance meant for different purposes. Health insurance is meant specifically to provide for medical bills while life insurance is meant to provide for sudden loss of income, legacy and other monetary requirements in event of unfortunate circumstances.

It is greatly advisable for one to ensure that one has not only sufficient, but also the RIGHT insurance to avoid any rude shocks when one should need protection the most.