What’s the Difference Between Life and Medical Insurance?

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It is easy to get confused between life and medical insurance. Insurance are often made up of multiple different aspects to it. For example an Insurance policy can have, Life insurance, medical insurance and even an investment linked policy all in one.

However, it is important to know the difference as your insurance coverage and premium that you are paying is dependent on it.

Life InsuranceMedical Insurance
Function BenefitHelps you or your beneficiaries financially if you experience death or total permanent disabilityHelps cover the cost of hospitalisation and treatment, or helps you financially if you experience an illness or an accident
Types– Term life
– Whole life
– Investment-linked policy
-Life-Annuity Plan
– Hospital and surgical (also known as a ‘medical card’)
– Critical illness
– Personal accident
-Hospital income
-Disability income
Pay-out– Lump sum
-Fixed amount monthly/yearly
-Covers medical costs ‘as charged’
-Fixed amount monthly/yearly
Tax ReliefEligibleEligible

What is life insurance?

A life insurance or policy gives or your designated beneficiary a lump sum pay-out in the event you pass away or experience permanent disability (i:e. if you cannot work due to being prohibited by an illness or injury)

What is medical insurance?

Medical insurance or medical card helps cover the cost of hospitalisation and treatment. It may also result in financial support if you are ill or injured.

  • Hospital and surgical Covers the costs of treatment or surgery when you are admitted to a hospital.
  • Critical illness Gives you a lump sum pay-out if you are diagnosed with one of the covered critical illnesses. (Insurance typically cover from a range of 36 to 45 critical illness)
  • Hospital income. Gives you a set amount of income (e.g. RM100) for each day you are hospitalised.
  • Personal accident Gives you a lump sum pay-out in the event of death or disability due to an accident.

Should I get both?

A majority of medical policies are bundled with an investment linked policy and may cost more in terms of premium.

(Premium = The amount you are paying per month/monthly/annual instalment of the insurance)

A standalone medical policy is cheaper, but the premiums will increase as you age. Your medical coverage also stops as soon as you stop paying your premiums.

Medical cost inflation is an undeniable fact as hospitalisation and surgery cost increases annually. It is important to have more medical coverage such as critical illness policies or even life insurance on top of your medical card. This decision should take account factors such as premium cost, and family history associated of any critical illness.

When it comes to life insurance, a major consideration is whether there are family members who rely on you financially. If you are married with children, having a lump sum pay-out can help your family with daily expenses. If you are single – and don’t have aging parents who rely on you – it might not be necessary.

Key Takeaway

Choosing a consultant over price war

Insurance in Malaysia is competitive in terms of pricing and coverage. The price war isn’t too big among the big insurance providers for similar insurance. However, choosing a consultant over price may be more beneficial as they will be your primary contact in the event you would need to use your insurance.

Need a recommendation, want to book an appointment with a specialist or get a quotation for a procedure?

Tap on our complimentary Smarter Health service.

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