Pure Health Insurance vs. Unit Link: Definitions and Differences

Growing public awareness of the importance of health insurance has been matched by growth in health insurance providers. In general, people use two types of health insurance: pure and unit link (insurance bundled with an investment). Each has its own strengths and weaknesses, so before you decide, it is important to weigh them.

Compared with pure insurance, unit link is seen as more rewarding financially because of the possibility of profit. On the other hand, when it comes to health protection, pure insurance is certainly the better service. So what do unit link and pure health insurance mean, and where do they differ? Here is the full explanation.

What is pure health insurance?

Unlike unit link, pure health insurance gives its customers health protection only. That means there is no potential profit from the premiums you pay. When you pay a premium, the money is set aside to be used when a claim arises.

If you make no claim by the time the agreement ends, the premiums you have paid can be withdrawn. There are two versions of premium refunds in pure insurance that you should know about. In the first, the insurer returns the premium in a fixed amount. In the second, the insurer deducts a certain percentage of the premium as an administrative fee.

What is unit link health insurance?

Unit link health insurance gives its customers both protection and investment. The premium you pay regularly includes savings that can be cashed out later. Usually, you can withdraw the funds after the protection period ends. If funds are withdrawn to handle a misfortune, however, the amount is as stated in the policy.

Premiums for unit link health insurance are indeed more expensive. The reason is that you also get investment funds on top of the coverage money. Unlike the coverage money, the investment funds are flexible, because they can be withdrawn at any time. Premiums are generally paid monthly.

The premiums you pay are then allocated to various investment sectors. This means that besides health protection, you can also earn a profit. In other words, the money you pay can grow if you become a unit link health insurance customer.

The difference between pure health insurance and unit link

In fact, the earlier sections have already given you a glimpse of how the two differ. In short, the difference can be seen in the scope of services given to customers. Beyond that, there are several other differences between these two types of insurance.

Pros and cons of pure insurance

• With pure insurance, customers enjoy more affordable premiums. The commitment period is also relatively short, at a minimum of just one year.
• The drawback of this insurance, however, is that money can be lost if no claim is made. The amount of money also stays flat, matching only the premiums paid.

Pros and cons of unit link insurance

• The advantage of unit link insurance is that you still receive funds even if there is no claim. Not only are the funds received, but the amount also grows because it is invested.
• The drawbacks of choosing unit link insurance, meanwhile, are the expensive premiums, the risk of investment failure that can shrink or wipe out the funds, and a relatively longer withdrawal time.

Most people now realize how important health insurance is for their own future and their family's. So you should follow their lead and put your money into the best health insurance provider soon. In general, there are two types of health insurance to choose from: pure and unit link.

Based on the definitions above, if you only want to focus on health protection, you can choose pure insurance. If you want profit as well as health coverage, choose unit link insurance. The conclusion, then, is to pick the type of health insurance that fits your needs.