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Life Insurance

Life insurance vs health insurance: what do you need to know?

28 May 2024

Life Insurance by Life Stage

The choices you make today can impact your long-term health, wealth and happiness. Understand the important role Life Insurance can play in key life events.

Life insurance vs health insurance: what do you need to know?

The journey through life is rarely straightforward, and things don’t always go to plan. That’s why it’s good to consider safeguarding against unforeseen financial difficulties, to protect yourself and your family in case something unexpected happens.

Life insurance products can offer financial security for you and your loved ones if life was to take an unexpected turn and you became seriously ill, injured or, worse still, were to pass away. In contrast, health insurance can lessen the financial burden of medical costs and treatments. In this article, we’ll tackle the question of life insurance vs health insurance – so you can make an informed decision on whether these products are right for you and your family.

What is life insurance and what does it cover?

At NobleOak, we offer a suite of insurance covers designed to provide financial protection in case of death, disability, or critical illness.

NobleOak Life Insurance (also known as Life, or Death Cover) provides a lump sum payment to your beneficiaries if you were to pass away or were diagnosed with a terminal illness. This payment, also known as a death benefit, can help your loved ones clear debt and have the financial stability to help maintain the lifestyle they’re accustomed to. Additional features include a funeral advance benefit, and grief counselling benefit.

Within a Life Insurance policy, there are also other covers available through NobleOak:

Total and Permanent Disability Cover (TPD) can be taken as an option if you have Life cover. TPD provides a lump sum payment if a sickness or injury results in you becoming totally and permanently disabled, preventing you from ever working again. A payment may be used to replace lost income, help reduce debt, and fund lifestyle adjustments.

Income Protection replaces up to 70% of your regular income if you become unable to work due to illness or injury. Income protection can be valuable if you rely on your income to maintain your standard of living or don’t have sufficient savings or sick leave to cover extended periods of disability.

Trauma insurance provides a lump sum payment if you are diagnosed with a specified critical illness or medical condition set out in the PDS (e.g. cancer or heart attack). This can help cover medical expenses, treatment costs, and lifestyle adjustments during recovery.

What is health insurance and what does it cover?

Depending on the type of package and level of cover you select, private health insurance provides for some medical treatments that are not (or only partially) covered by Medicare in a public or private hospital with a doctor of your choice. It can also cover health related services such as dental, optometry and physiotherapy.

Most health insurance providers offer two basic package types: ‘hospital cover’ and ‘extras’. They can be taken as standalone or combined together into one package.

A 2023 industry report showed that 44.9% of people in Australia have private hospital cover, 54.6% have extras coverage, and most people have a combined health insurance policy.

What’s the difference between life insurance and health insurance?

These are some of the key similarities and differences between health and life insurance:

Feature Life Insurance Health Insurance

Coverage options


Generally these include:

  • Life (or death) cover
  • Income protection cover
  • Trauma cover
  • Total and permanent disability (TPD) cover

Generally these include:

  • Hospital cover (for hospital-related medical expenses)
  • Extras cover (for other types of health expenses) such as dental, optometry and physiotherapy
Tax Status Some types of life insurance are tax-deductible There may be tax benefits for health insurance policy holders, depending on your age and income status. Visit the Medicare Levy Surcharge (MLS) page for more information.
Duration of cover Lifetime, or for a specific period Typically renewable annually
Beneficiaries Nominated individuals (often immediate family members of the policy holder, depending on the cover selected) Health insurance can have a single beneficiary or multiple beneficiaries (such as in situations where parents take out coverage for themselves and their children)
Impact on family Offers financial protection for you or your loved ones in the case of  your death, if you suffer a sickness or injury and can’t work, or you are diagnosed with a critical illness condition (depending on which type of cover you take out) More choice and affordable access to healthcare


Can you have both life insurance and health insurance?

Yes, many Australians have a life insurance policy and a health insurance policy.

Life insurance can mitigate some of the financial strain on your family in the event of your death, total and permanent disability, loss of income if you’re sick or injured and can’t work, or critical illness (depending on which policy you take out). Health insurance, on the other hand, can provide financial assistance to you (and/or your children) for healthcare-related costs such as hospital visits, surgeries, and health related services, such as dental, optometry and physiotherapy.

Should you keep your life insurance policy if you have health insurance?

The question of health insurance vs life insurance will depend on your individual circumstances. If you’re considering taking out a health insurance policy, useful information can be found here:

If you’re considering taking out a life insurance policy, NobleOak can help you make an informed decision, or you can visit a comparison site to compare direct life insurers. Please visit these pages for more information:

Comparison sites:

Other NobleOak articles which may be helpful:

You can also begin the process by starting a quote.

Insurance policy choices based on life stages

Here, we’ll look at how different life stages can affect decisions related to health and life insurance:


  • Starting out: If you’re starting your first job or establishing a career, a sickness or injury may cause a serious financial setback. Income protection within a life insurance policy can replace up to 70% of your income to help you get back on your feet. When it comes to health insurance, some sources report that private health insurance may not be as useful until you are over 30, or unless you’re a high income earner. Ultimately, it’s important to do your research and review your own personal situation, objectives and needs.


  • Getting married or living de facto:  When you choose to spend your life with someone, you want your financial situation to be as secure as possible. Life insurance products can safeguard your partner’s future if you suffer a serious sickness or injury, or if the worst was to happen and you were no longer around. This may also be a great time to take out couples’ health insurance, which often comes at a discounted rate compared with individual plans.


  • Getting a mortgage: When buying a new home, it’s important to prepare yourself for all possible events – including how your family would meet the mortgage repayments if you were to suffer a significant sickness or injury or pass away. Life insurance products such as life (or death) cover can help, so that your loved ones would be better placed to clear debt or service the mortgage ongoing.


  • Raising a family: As a parent, you’re responsible for your family’s health and financial security.  If an unforeseen event were to happen and you could no longer meet those requirements, a life insurance policy could help protect the whole family. As for health insurance, family plans can cover everyone in the household for medical and other health related expenses under a single policy.


  • Retiring: As you get older and take the time to enjoy the things you’ve worked hard for, Life insurance and health insurance may be considered as an important part of your financial plan. If you’re considering Life Insurance, the NobleOak Life Insurance calculator can help you determine the type and amount of cover you may need, and health insurance companies provide options for people of all ages.


Making the right choices

Selecting appropriate Life Insurance for your circumstances empowers you and your family to face life’s hardest challenges with confidence. Please feel free to contact us if you’d like to talk to one of NobleOak’s friendly life insurance experts.

You can also use our Life Insurance Calculator, which is designed to help in 5 easy steps. It only takes 5-10 minutes to use, making the process fast and simple.

Explore our life insurance guides for more information about the different types of covers NobleOak offers.

Award-winning life insurance

NobleOak provides comprehensive coverage to safeguard your financial wellbeing and support your loved ones if life took a turn for the worse.

Discover our award-winning life insurance solutions, or start a quote today.

Disclaimer: Any financial product advice is general in nature only and does not take into account your individual circumstances, objectives, financial situation, or needs. Before acting on it, please consider the appropriateness of the information, having regard to those factors. Any third-party websites or tools referred to are subject to their own terms and conditions and NobleOak Life Limited makes no representation or warranty as to any information on those websites. Persons deciding whether to acquire or continue to hold life insurance issued by NobleOak Life Limited should consider the relevant Product Disclosure Statement and Target Market Determination for the product. Please also consider NobleOak Life Limited’s Financial Services Guide. NobleOak Life Limited ABN 85 087 648 708 AFSL 247302.

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