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When it comes to the safety of your family, it would be a good idea to understand the comparison between term insurance vs health insurance. Term insurance plan secures your family’s future financially in case of your death, and health insurance offers a guarantee that you and your loved one’s medical bills are covered. Though, the premium of term plans are affordable, and health insurance plans are quite expensive. While health plans don’t offer returns but in case of choosing term return of premium (TROP) option, the policyholder would get the premium amounts paid as maturity/survival benefits if they survive the policy term.
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To make your selection easy, let’s understand the difference between term insurance vs health insurance plans:
Term Plans
The biggest difference between term insurance vs health insurance is that the term plans come under life insurance, whereas health insurance plans come under general insurance.
| Parameters | Health Insurance | Term Insurance |
| Meaning | Health Insurance protects you and your family members from unexpected medical expenses | Term Insurance is a policyholder’s protection cover for his/her loved ones. It secures the family members financially in case of the policyholder’s unfortunate demise. |
| Coverage | Health insurance offers coverage on the health/medical claims within the term | Term Insurance offers coverage for the policyholder’s premature death within the fixed tenure. |
| Maturity Benefits | This plan does not provide any type of maturity benefits when the policy tenure ends | It provides maturity benefits at the last of a policy tenure |
| Premiums | The premium you are required to pay for health insurance is relatively higher than the term insurance. | Term insurance premiums are lower in comparison to others |
| Premium Payments | The premiums can be paid monthly, quarterly, annually, and semi-annually. | The premiums can be paid in regular, limited or single premium pay terms in monthly, quarterly, annual, or semi-annual modes. |
| Death Benefit | It does not provide death benefits in case of policyholder’s demise | The plan provides the nominee with a lump sum money if the policyholder passes away |
| Payouts | The premium amount payouts are mainly monthly, though some insurers also provide yearly, half-yearly, or quarterly premium payouts. | The preferred mode of payout can be chosen at policy inception and can be made on monthly, quarterly, annual, or semi-annual modes. |
| Tax Benefits | All premiums paid for you, your family members, and elderly parents are eligible for income tax deductions u/s 80D of the Income Tax Act, 1961. | All premium paid is exempted from tax u/s 80C i.e., up to Rs. 1.5 lacs. Moreover, the tax benefit is also available for maturity claim u/s 10(10D) of the Income Tax Act, 1961. |
| Duration | Health insurance plans are typically of 1 year term and need to be renewed. | The range for term insurance policy term commences from 5 to 30/45 years. |
| Renewability | The health insurance plans are renewable and need to be renewed after every coverage cycle for continued protection | The term insurance plans are usually not renewable, and the coverage expires at the end of the policy term. |
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
Let us understand the comparison between term insurance vs health insurance by taking a look at the need for term insurance and health insurance, its types, and its benefits:
Note: You can easily calculate the term plan premium by using the term insurance calculator online tool.
If you are looking out for a plan that will secure your family’s financial needs in case of your absence, then you should consider purchasing a term insurance plan. Term insurance plans are cost-effective and offer high life cover at low premium rates as compared to other insurance plans. These plans offer death benefits to your family or nominee if something happens to you.
This benefit can be used to repay any debts you may have, pay for funeral prices, recompense for educational expenses for your children, and replace the future salary that your loved ones would still require to live a comfortable and happy life. These days, a term plan is a must-have and should be considered by everyone to include in their insurance portfolio to secure your family financially.
Note: Know more about what is term insurance.
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As you all know, medical emergencies and uncertainties can strike you anytime, anywhere, that can put your finances under a substantial burden. And, you cannot only depend on your savings to cover the hospitalisation and treatment expenses. Thus, it is important to buy a health insurance plan that takes care of the medical expenses of the family. These plans provide comprehensive coverage to fulfill the medical needs of your loved ones. Health insurance plans in India also offer the benefit of cashless claim settlements, pregnancy insurance, reinstatement benefits and more.
Level Term Plan – In this, the sum assured remains unchanged during the whole term, and the amount is paid to the family members after the policyholder’s death. There is no maturity benefit limit to this type of term insurance plan.
Term Return of Premium Plans – With these plans, the nominee will receive the death benefit on the death of the policyholder during the policy term, and the policyholder will receive a return of premiums on surviving the policy tenure.
100% Refund of Premium at No-cost – These plans allow you to exit the plan early at a specific stage and receive all the premiums paid during the policy tenure.
Whole Life Insurance Policy – These plans provide coverage against death for the policyholder’s entire life i.e., till 99/100 years of age. During this tenure, if the policyholder suffers an unfortunate death, the sum assured is paid to the policyholder’s family.
Individual Health Insurance – This policy covers a single person in case the policyholder is diagnosed with a critical illness or is unable to pay for a medical expense like hospitalisation or treatment costs.
Family Floater Health Policy – Under this plan, the whole family, along with the life assured, is covered under a single policy. For example: If a family of 4 purchased mediclaim insurance, all the members, including the kids, will be covered under the plan, and the policy will pay the compensation benefit for all the members of the family.
Senior Citizens Health Insurance – This policy is specifically for senior citizens, that provides all the probable benefits that cover the common treatments in old age. These plans provide coverage for individuals over the age of 60 years old.
Critical Illness Insurance – Critical illness insurance provides a financial benefit to the policyholder in case they are diagnosed with a life-threatening illness like a heart attack, cancer, kidney failure, or other such illnesses.
Top-up Health Insurance Plans – These plans can be purchased on top of your existing health insurance plans and provide additional coverage in case you exhaust your current health insurance limit.
Maternity Insurance Plan – These plans cover the costs incurred during pregnancy like pre and post-natal care, cost of delivery, medicines, medical tests, and newborn baby expenses.
Cancer Insurance Plan – The cancer insurance plan covers the expenses that come with the diagnosis of cancer. For example, expenses like diagnosis, hospitalisation, treatment, chemotherapy, surgery, and radiation therapy are covered under this plan.
You can take a look at the following benefits of term insurance to get a better understanding of the difference between term insurance vs health insurance plans:
Term insurance plans provide a death benefit to your nominee in case of your unfortunate death during the policy term, which can help them take care of their financial obligations.
These plans typically do not provide a maturity benefit with their regular term plans, but with the term return of premium plans, you can get a return of all the premiums paid throughout the policy term.
Term insurance tax benefits help you save on your yearly taxes u/s 80C and 80D and offer a tax-free benefit to your family in your absence with section 10(10D).
These plans offer the option of enhancing the base coverage with optional riders that you can include at nominal premiums.
There are several types of term insurance plans available from which you can select the one best suited for your needs.
With these plans, you can secure a large sum assured at affordable premiums for a long policy tenure.
You can understand the difference between term insurance vs health insurance by taking a look at the benefits of health insurance plans:
Health insurance plans cover pre and post-hospitalisation charges up to the sum insured limit
These plans cover diagnostic expenses like scans, tests, medications, ambulance, daycare procedures, and more.
You can add the critical illness cover as an add-on or as a standalone policy
Some health insurance plans also offer maturity benefits that cover the expenses incurred during delivery and new born baby expenses.
Home or domiciliary treatment costs are also covered in some health insurance plans
You can buy term insurance plans from Policybazaar by following the below-mentioned steps:
Step 1: Go to the Term insurance form
Step 2: Enter your name, gender, DOB, and contact information
Step 3: Fill in your smoking habits, occupation types, annual income, and educational background
Step 4: Select the most suitable term plan and proceed to pay
Both term insurance vs health insurance have their own unique set of benefits as they both are important products to have in one’s financial portfolio. You can go through the difference between term insurance and health insurance in the above sections to understand the importance of each type of policy. Selecting a suitable cover for both policies becomes convenient if you assess your responsibilities, health state, occupation, age, and other related factors. Choose carefully after comparing the benefits of term insurance vs health insurance to make an informed decision.
Note: Check out the best term insurance plan in India and choose one that suits your requirements.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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