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Life Insurance vs Health Insurance: What’s the Difference?
Published: July 20, 2026
Planning for your financial protection means understanding the different types of coverage options available to you. Two types of insurance plans to consider in Canada are life insurance and health insurance. The key difference between the two is that life insurance pays out a one-time payment to your beneficiaries should you pass away, while health insurance helps manage health-related expenses while you're alive. In this article, we'll provide you with an overview of life insurance and private health insurance, so you can better understand your coverage options.
In this article:
- What is life insurance?
- What can the life insurance death benefit help cover?
- Do you need life insurance?
- What is health insurance?
- What does private health insurance help cover?
- When to consider private health insurance?
- Why is it a good idea to have life insurance and private health insurance?
- A quick comparison between life and health insurance
- How to decide if life insurance may be right for you?
- How do you decide if private health insurance may be right for you?
- Related FAQs
What is life insurance?
Life insurance can help protect your loved ones financially. With life insurance, you make regular premium payments, and the life insurance company pays a tax-free one-time payment (known as the death benefit) if you pass away while your policy is active. This benefit goes to your designated beneficiaries to use however they choose.
What can the life insurance death benefit help cover?
The life insurance death benefit can help your beneficiaries cover:
- Everyday living expenses
- Debts, such as mortgage, car loans, or personal loans
- Funeral and other final expenses
- Lost income to help your family maintain their living standards
- Children's education
- Caring for dependents
- Charitable donations
Do you need life insurance?
You should consider life insurance when you have people who rely on you financially, such as a spouse, children or elderly parents. Some key life milestones that would indicate it's time to buy or review your existing life insurance coverage are when you are:
- Buying a home: to help protect the ability to pay the mortgage
- Newly married or starting a family: to help ensure your spouse and children are supported financially (for a period of time), should you pass away
- Carrying household debt: can help with paying down or off any shared debt
Life insurance is ultimately about leaving a legacy and can help financially protect the people you care about most. Purchasing coverage earlier, when you are younger and healthier, is generally more affordable.
What is health insurance?
Health insurance in Canada consists of public and private coverage.
Government health insurance
Government health insurance is your provincial or territorial health plan, which is publicly funded. For example, OHIP in Ontario or the Medical Services Plan in British Columbia. Public health insurance covers things like doctor visits, hospital stays, certain medical procedures, and diagnostic tests.
Private health insurance
Private health insurance covers what your provincial plan doesn't cover or only partially covers. It offers extended health and dental care protection to fill coverage gaps. Private health insurance is individual coverage purchased from a health insurance provider.
What does private health insurance help cover?
Here are some examples of what private health insurance could help cover:
- Prescription medications
- Vision care
- Paramedical services
- Medical supplies and equipment
- Dental care
- Ambulance transportation
When should you consider private health insurance?
Private health insurance can help you manage routine or unexpected medical costs. There are certain periods in life when it's a good idea to consider getting coverage. These can include when you are:
- Self-employed: if you don't have a group benefits plan through your employer, private health insurance can be vital
- Nearing retirement: you may lose your workplace coverage
- Managing ongoing health needs: such as regular medication or therapy
Why is it a good idea to have life insurance and private health insurance?
- Life insurance provides a one-time tax-free payment to your beneficiaries if you pass away.
- Private health insurance helps cover medical expenses not covered by your provincial health plan.
Together, they provide you with more complete coverage.
A quick comparison between life and health insurance
Key differences between life and private health insurance | ||
Feature | Life insurance | Private health insurance |
Main goal | Help protect loved ones financially after death | Help manage ongoing medical expenses for you and your family |
Payout | Tax-free one-time payment to your named beneficiaries | Directly covers or reimburses you for eligible health costs |
When can it help | After the insured person passes away | When you have medical or dental expenses not covered by your provincial health plan |
Best for | Individuals who want financial protection for their beneficiaries | Individuals without employer or other group benefits |
How do you decide if life insurance may be right for you?
Ask yourself:
- Do you have children, a spouse, or elderly parents who rely on you financially?
- Would your family be able to manage bills like mortgage, rent, or utilities for a period of time without your income?
- Are you carrying any household debt?
How do you decide if private health insurance may be right for you?
Ask yourself:
- Do you regularly pay out-of-pocket for routine health costs not covered by your provincial health plan or your employer group coverage? For example: prescriptions, dental care, or therapy.
- Are you self-employed or a contractor?
- Are you nearing retirement?
If you're reviewing your coverage or planning ahead, exploring your coverage options is a great place to start.
Frequently asked questions
What happens if I already have group benefits through work?
Employer-provided group benefits are a great starting point, but they may not cover everything. Some people add personal health insurance or life insurance to fill gaps or prepare for times when they might lose employer benefits, such as job changes or retirement.
Does health insurance cover pre-existing conditions?
Coverage for pre-existing conditions can vary by provider and the plan you choose. Some plans may have waiting periods or exclusions. It's always best to review the policy details or speak with a licensed insurance advisor.
Does health insurance replace provincial coverage?
No, health insurance is not designed to replace provincial health care plans. It is designed to be additional coverage for health and dental care expenses not funded under provincial plans.
The content on this page is for general information purposes only and does not constitute legal, financial or insurance advice. The information contained herein is subject to change without notice. Coverages described herein may be subject to additional eligibility criteria, limitations and exclusions.
TD Term Life Insurance and TD Guaranteed Acceptance Life Insurance are individual life insurance plans underwritten by TD Life Insurance Company. Some restrictions may apply. Applications subject to approval. See each plan's Insurance Policy for coverage details, including limitations and exclusions.