Life and health coverage

Life and health coverage represents a category of insurance policies that protect individuals against financial loss from death, illness, or injury. Life coverage pays beneficiaries a lump sum upon the insured’s death, with common examples including term life and whole life insurance.

Health coverage reimburses or directly covers medical expenses resulting from illnesses or injuries, using products such as HMOs, PPOs, and high-deductible health plans, based on a report from YourInsurance.info. The difference between life and health coverage lies in the risk covered: life insurance addresses mortality risk, while health insurance addresses morbidity risk.

U.S. Federal law mandates that insurers provide certain essential benefits in health plans under the Affordable Care Act (ACA), covering hospitalization, maternity care, preventive services, mental health care, prescription drugs, and pediatric services among others.

Most Americans access life and health coverage through employer-sponsored group policies or individual markets on state exchanges. Premium costs for health coverage averaged $7,911 for single coverage and $22,463 for family coverage in 2022 (Kaiser Family Foundation), while term life policy rates vary by age and face amount, e.g. approximately $340/year for a healthy 35-year-old with a $500,000/20-year policy (Policygenius data).

Life and health coverage excludes most elective procedures–such as cosmetic surgery–and suicide exclusions may apply during initial policy periods (e.g. first two years). People select benefit amounts based on income replacement needs and typical out-of-pocket medical spending; for example, LIMRA reports that median new individual life claims paid were $80,000 in 2021.

Critical illness riders and accidental death riders expand core coverage in many U.S. Life and health contracts; for instance, MetLife offers critical illness add-ons covering cancer and heart attack diagnoses.

Claims require proof of loss–death certificates for life insurance or itemized bills plus explanation of benefits (EOB) forms for health claims. IRS tax code generally exempts life insurance payouts from income tax but taxes some employer-paid health premiums unless they meet Section 125 cafeteria plan criteria.