Which is Better - Health Insurance or Term Insurance?

Difference Between Health Insurance and Term Insurance

Should you buy health insurance or term insurance, is always debatable. Well, both serve their specific purposes; here is a quick rundown of the differences between the two to help you decide better:

Now, let's learn about health insurance and term insurance in detail.

What is Health Insurance?

Health insurance is a type of insurance where insurers cover the cost of medical care in return for a premium. It pays for expenses like doctor visits, hospital stays, medicines, and treatments when you are sick or injured. Depending on the plan, it can also cover preventive care, like vaccinations or health check-ups, to keep you healthy.

You may be curious to read more about: What is Health Insurance?

Need for Health Insurance

Healthcare expenses are increasing every year, and health issues do not come with prior notice. No matter how much good care you take of yourself, health problems remain unpredictable.

It is wise to get a medical cover with adequate healthcare coverage if you do not want to exhaust your savings on medical bills.

It is not sensible to pay expensive hospital bills when you can buy a mediclaim policy to reimburse your healthcare expenses. In fact, instead of arranging funds to avail of the best medical treatment, you just need to pay the premium every year to avail of the benefits.

However, before purchasing a mediclaim policy for your family or yourself, you should compare different plans based on your needs and then select a suitable one.

Types of Health Insurance Plans

There is a mediclaim policy for everyone. Below are some of the different types of medical insurance plans that you can consider:

• Individual Health Insurance: An individual health plan offers coverage to only one individual i.e. the policyholder. So, under this policy, as a policyholder, you will avail the benefits of medical insurance against the premium paid.
• Family Floater Health Insurance: Mediclaim policy for family offers coverage to an individual, where he/she can include his/her family members including spouse, children, and parents.
• Senior Citizen Health Insurance: Senior citizen health insurance plans are designed to offer medical coverage to elderly people above the age of 60 years.
• Critical Illness Insurance: The cost of treatment for critical illnesses cover is quite exorbitant. It covers life-threatening diseases such as cancer, kidney failure, cardiovascular diseases, etc.
• Top-Up Health Insurance Plan: You can buy top-up health plans along with your current health plan. It will prove to be useful upon exhaustion of the threshold limit of your base mediclaim policy.

Benefits of Health Insurance Plans

Check out the benefits of a health insurance plan:

• A health insurance policy covers pre and post-hospitalisation expenses up to the sum insured limit.
• Some health insurance plans offer maternity benefit that covers delivery expenses and new-born baby medical expenses.
• Domiciliary hospitalisation, or home care treatment expenses are also covered under some health insurance plans.
• Diagnostic expenses like x-rays, scans, medicines, ambulance, day care procedures, ICU, OT, etc. are also covered.
• Critical illness cover can be bought as an add-on or as a standalone product.
• Cashless treatment at network hospitals ensures no upfront payment for medical services.
• Many health insurance plans offer annual health check-ups to monitor overall health.
• Restoration benefit automatically refills the sum insured if it is exhausted during the policy term.
• Family floater plans allow coverage for the entire family under a single premium.

What is Term Insurance?

Term insurance is a life insurance policy that provides financial protection for a specific period or term. If something happens to you during this term, the policy pays a lump sum amount to your family or beneficiaries.

Need for Term Insurance

Term insurance provides financial support to the dependents of its policyholder in case of his/her sudden or untimely demise within the policy tenure. So, if you do not want your loved ones and dependents to suffer when you are not around, then you should consider buying a term insurance policy. It will offer financial security and will help your dependents continue living a similar lifestyle.

There are various types of term plans that you can consider. Assess your family's future financial needs and buy a plan after considering various life events such as house loan, children's marriage, their higher education, etc. If you think that your untimely demise can lead your family to financial trauma, then you should get a term insurance policy.

Types of Term Insurance Plans

Below are some of the different types of term plans that you can consider:

• Level Term Insurance Plan: In this type of term plan, the sum assured remains the same throughout the policy term.
• Term Insurance with Return of Premium (TROP): This variant of a term plan returns your premium if you outlive the policy tenure. The premium is payable at the end of the term.
• Premium Refund Plan: If you survive the policy term, the premiums are refunded to you and are tax-free.
• Term Plan with Riders: You can opt for additional coverage benefits like waiver of premium, critical illness rider, etc., to enhance your basic term insurance coverage.
• Convertible Term Plan: You can convert this type of term insurance plan into whole life insurance or an endowment plan.
• Increasing Term Plan: Under this type of term insurance plan, the sum insured can be increased every year while the premium remains the same.
• Decreasing Term Plan: A percentage of the sum assured decreases with each passing year, which is helpful in case you have an ongoing loan or mortgage.

Benefits of Term Insurance Plans

Below are the benefits of buying a term insurance plan:

• A term insurance plan offers a high sum assured at an affordable premium.
• It offers multiple death benefit payout options.
• It is the most basic type of life insurance plan that is very easy to understand.
• To enhance the coverage of your term insurance plan, you can add a rider benefit to it. The insurance providers offer various riders for this purpose.
• It offers income tax benefits u/s 80C of the Income Tax Act.
• If you add a critical illness rider to your term insurance plan, you get a lump-sum amount on the diagnosis of the covered critical illnesses in your policy.
• A term insurance plan with the 'Return of Premium' option allows you to get back your premiums paid if you outlive the term of your policy.
• Accidental death benefit cover is also provided.

Which is Better - Health Insurance Vs Term Insurance?

If you compare the benefits of term and health insurance, you will understand the need for both, sooner or later. Though they serve distinct purposes of providing financial support in different circumstances but instead of considering them as alternatives, think about opting for both to ensure comprehensive financial protection for yourself and your family. So, it is better to make an informed decision at the right time before it is too late.

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