Medical Insurance VS Critical Illness Insurance VS Life Insurance

Medical insurance, critical illness insurance, and life insurance have different coverage and functions:

• Medical insurance: Reimburses medical expenses on an actual cost basis, and will reimburse according to the reimbursement items and limits on the policy.
• Critical Illness Insurance: Provides a one-time compensation upon diagnosis of a specified critical illness, with no limit on the amount or purpose, which can help compensate for lost income due to illness or pay for treatment costs.
• Life insurance provides a lump sum payment upon the death of the insured, offering financial security to their family.

1. Savings Component

Voluntary health insurance and health insurance generally do not contain a savings component.

Conversely, critical illness insurance and life insurance can be divided into savings and investment type or pure protection and consumption type policies. The former, in addition to the critical illness/life protection function, also has a savings effect, and the policy will accumulate cash value over time, while the latter does not.

2. Insured age

The insured age varies between insurance companies and individual plans. For example, Bowtie:

All standard voluntary health insurance plans offer lifetime renewal up to age 100, while the details of flexible plans vary by company. Bowtie Voluntary Health Insurance – Flexible and Bowtie Pink Voluntary Health Insurance, however, guarantee lifetime renewal .

There are no uniform age limits for critical illness insurance and life insurance; these are determined by different insurance companies. Before purchasing insurance, be sure to carefully review the coverage period.

3. Tax incentives

One advantage of voluntary health insurance is that premiums are tax-deductible , with a maximum deduction of $8,000 per insured person. Insured persons can be the taxpayer themselves, their spouse and children, or the taxpayer’s or their spouse’s grandparents, parents, and siblings. Therefore, if you insure eligible individuals, you can receive tax deductions.

Other medical insurance, critical illness insurance , and life insurance are not currently eligible for tax deduction.

Many people mistakenly believe that choosing just two or one of the three —medical insurance , critical illness insurance , and life insurance— is sufficient. In reality, these three types of insurance are designed differently and are suitable for different situations. Therefore, if you are the breadwinner of your family, it’s best to purchase all three to create a more robust safety net for yourself.

If you have limited funds, you might want to consider the following key points:

1. What kind of protection do you hope to have?

The purposes of medical insurance, critical illness insurance, and life insurance are quite different: medical insurance aims to reimburse medical expenses and reduce daily financial burden; critical illness insurance provides a lump-sum payment when you lose your ability to work, solving cash flow problems; and life insurance provides financial security for your family when you unfortunately pass away prematurely.

Since the coverage and compensation methods of the three are very different, you should first weigh your personal needs before choosing the most suitable insurance plan.

2. Are the benefits provided by the company sufficient?

Many companies purchase company medical insurance or group life insurance for their employees , providing basic medical coverage such as hospitalization, outpatient care, and dental care, as well as life insurance. Therefore, if you already have company group medical insurance/group life insurance as a safety net, you can prioritize purchasing critical illness insurance.

If you still have the budget, you can also purchase a medical insurance policy with a larger coverage amount (such as Bowtie Pink Voluntary Health Insurance ) and a life insurance policy for more comprehensive protection.

3. What age group do you belong to?

Objectively speaking, critical illness insurance covers serious illnesses, but the chance of contracting one is relatively low. If you are younger, your chances of developing a critical illness should be lower. Furthermore, early treatment of minor illnesses can prevent them from developing into critical illnesses. In other words, if you are young and have a limited budget, you should prioritize purchasing medical insurance and life insurance.

1. Prioritize purchasing medical insurance

Take a recent graduate entering the workforce as an example. Once they have their own income, they can start planning their finances, and purchasing appropriate insurance within a reasonable budget is a crucial part of risk management. Since their income may be low at the beginning of their careers, many people will use the lowest budget to purchase the insurance they urgently need first.

Basic health insurance is the type of insurance that provides the most basic protection against major and minor illnesses or accidents among the three types. When choosing a health insurance product, you can make appropriate adjustments based on whether you have company health insurance and its coverage to reduce overlap in coverage and improve premium efficiency.

For example, if you find that your company provides team medical insurance, you may consider purchasing a high-end medical insurance policy with a ” deductible ” as a supplement to enhance your coverage.

2. Purchase critical illness insurance as needed

If you have a remaining budget after purchasing basic health insurance, or if your income has increased and you have additional funds available, then it’s time to buy critical illness insurance . Considering current medical inflation and the list of expensive out-of-pocket medications, a critical illness coverage amount can start at $1,000,000 and be increased according to your financial capacity. Since critical illness insurance offers different plans, contribution methods, and savings options, under the premise of budget control, a basic critical illness plan that is not based on savings and can be purchased online is the best way to obtain the maximum coverage amount with the lowest premium.

Having both medical insurance and critical illness insurance means that even if a critical illness occurs, medical insurance can provide basic medical expense reimbursement, while the cash compensation for critical illness can make up for the shortfall that medical insurance cannot fully cover, as well as provide living allowances during the recovery period.

3. Purchase life insurance when getting married

Entering the next stage of life, such as starting a family or buying a home, changes in family roles and responsibilities lead to different insurance needs. Whether it’s the birth of a child or taking on a multi-million dollar mortgage, these are responsibilities or liabilities in life. At this stage, the unfortunate event of passing away will not only cause immense grief to family members but also create enormous financial pressure. If sufficient assets or security haven’t been left for family members, they will suffer emotional trauma while simultaneously bearing significant financial burdens.

To avoid the double blow to family members and to ensure their quality of life doesn’t decline due to your sudden passing, purchasing appropriate life insurance is the most effective solution. Whether it’s debts related to children or mortgages, the term is generally only 20 to 30 years. Therefore, purchasing non-savings term life insurance allows you to buy millions in coverage at the lowest premiums, ensuring your family won’t have to make huge compromises regarding housing and children’s education after your death.

For example, a 30-year-old non-smoking male who purchases all three Bowtie products will only pay $337 per month in premiums.