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People often get confused about health and term insurance as these two are mistaken for the coverage they provide. They play different but integral roles in your life; understanding them will help you understand their importance. The term insurance is the insurance that covers your family in case of your unfortunate death. In contrast, health insurance promises financial compensation for medical treatment costs in case of planned or unplanned hospitalisation. There are variations in the premium, purpose, scope, and applicability of both kinds.
This article will shed some light on the meaning, differences and benefits of term and health insurance for your overview.
What is Health Insurance?
Health insurance covers the medical costs incurred due to accidents or diseases. It promises to pay for the insured's hospitalisation and other medical expenses. The alarming rise in lifestyle illnesses among individuals of all ages in recent years has increased the necessity for health insurance.
The sum insured, or the maximum amount the insurer would pay to the policyholder in the event of a medical emergency, is one of several options the insurance company provides under the policy. The insured members pay a premium to use health insurance when needed.
What is a Term Plan?
Term insurance is a bond between the policyholder (insured) and the insurance company wherein, in the event of the policyholder's untimely death, the insurance company pays a predetermined sum to the insured person's family. Term plans are important for long-term financial planning, as you shall discover.
It's important to realise that term insurance is the most basic type of insurance coverage available, providing your family with complete financial security against the uncertainties of life.
>> Also Read: What Happens to a Family Floater Policy if the Proposer Dies?
Difference Between Term Insurance vs Health Insurance
Both term insurance and health insurance are necessary for a financially stable existence for you and your family. The main variations between the two are as follows:
| Factors | Term Insurance | Health Insurance |
|---|---|---|
| Objective | It provides financial support to your family after an untimely demise. It has no benefit during your lifespan. | It provides financial support in case of a medical emergency. |
| Premium | The premium you have to pay for term insurance is easily affordable. | The premium you have to pay for health insurance varies according to the age and health of the insured. Therefore, buying health insurance in good health and at an early age is advisable. |
| Renewal | It does not have renewal benefits. You must pay the same amount every year to keep the policy running. | If you do not claim under your health insurance policy, you get No-Claim Bonus in your next renewal. |
| Tax Benefit | Section 80C of the Income Tax Act allows for deducting term insurance premiums from income up to a maximum of Rs. 1,50,000. | You can get the deduction for medical insurance premium 80D Income Tax Act 1961. |
| Premium | More affordable than a health insurance policy. | Premium depends on the age of the insurer. |
| Policy Duration | 5 to 40 years | 1 to 5 years |
Types of Health Insurance Plans
The various types of health insurance include:
- Individual Health Insurance: It covers medical expenses only for the insured. The involved parameters are age, gender, medical history, etc. You can customise the policy to suit your requirements.
- Family Health Insurance: One family, one policy. It is much cheaper and easier to maintain than individual health insurance.
- Unit Linked Health Plan: It offers dual benefits to policyholders by combining health insurance with investment opportunities.
- Senior Citizen Health Plan: It is dedicated to people aged 60 and above.
Benefits of Health Insurance Plans
Health insurance protects you financially during a hospitalisation. The following are health insurance benefits:
- Pre and post-hospitalisation Cover: This benefit includes coverage for expenses such as X-rays, blood test and other medical reports, and medications before 30 days of hospitalisation and 60 days following discharge
- Domiciliary Hospitalisation: This is one of the most important benefits of having health insurance. When a patient is unwell, and hospitalisation is not an option, things get tough for the patient and family members. This might be because the patient cannot be relocated to a hospital or the nearest hospital has no available beds. In such cases, having a health insurance plan that covers in-home hospitalisation might be a lifesaver.
- Cashless Hospitalisation: Wouldn't it be simpler if you didn't worry about paying the hospital and prescription bills? This is possible if you prudently pick a health insurance plan with a cashless hospitalisation facility. This service has grown in importance and use over time since it covers high healthcare expenses and saves you the hassle of paying your bills and filing for reimbursement.
Care Health Insurance provides its customers with comprehensive health insurance plans such as health insurance plans with maternity coverage, comprehensive health insurance plans for individuals and families, group health insurance plans, and more. With a solid network of 21700 cashless healthcare providers across India and a smooth claim settlement process, Care Health Insurance can be a good option for covering your loved ones.
Types of Term Insurance Plans
Some of the term insurance plans include:
- Level Term Insurance: Here, premiums are fixed, and you receive a set amount per policy period.
- Increasing Term Insurance: The sum assured gradually increases per inflation making its premium higher than level term insurance.
- Decreasing Term Insurance: Though steady coverage is provided, the amount assured decreases with time to combat financial commitments.
- Term Insurance with Return of Premium (TROP): The premium is refunded if the insured lives longer than the policy’s duration. TROP has higher premiums than other insurance plans.
- Convertible Term Insurance: The policyholder can convert their term policy into a universal or whole policy without any further health qualification process.
- Whole Life Insurance: This type of permanent life insurance provides financial protection to the insured for life as long as they pay the premiums on time.
Benefits of Term Insurance Plans
Term insurance offers a financial benefit to the family of the insured after an untimely demise. The following are a few benefits:
- Financial Support to the Family: When the sole breadwinner of the family member passes away, the family enters into financial distress. The payout from the term insurance helps reduce the family's financial stress.
- High Sum Insured at Low Premium: One of the key advantages of term insurance is its low cost. A term insurance policy has a lower premium than other insurance plans. Another advantage of term insurance is that the premium cost is less the earlier you get it.
- Payment of Sum Assured: In the event of the insured's untimely death, the family members will get the sum assured amount as a payout. At the outset, the policyholder can receive a lump sum payment, a monthly or yearly income. This will help the nominee meet the financial needs and bills, among other expenses.
Disclaimer: The above-mentioned information is for reference purposes only. Plan features, benefits, coverage, and underwriting of claims are subject to policy terms and conditions. Please refer to the brochure, sales prospectus, and policy documents carefully.
