Ensuring your family’s safety is always on top of your mind. Whether you have just started a new job or already have a family to look after, securing your loved ones always remains on the list of top priorities. That is why planning your finances is crucial from the start. However, not just planning, but also backing up with an adequate safety net is essential. For that you have insurance. But with a varied list of alternatives, at times it can be confusing to select between term insurance covers and health insurance plans
No person is immune to illnesses or unforeseen accidents that can result in fatal consequences. For such times, it is crucial to be well prepared and have a financial backup. The last thing you must be worried about at the time of an ailing family member is money. This article elaborates on the difference between health insurance and term insurance and what should be your pick.
But for starters, let’s understand what term insurance and health insurance are made of -
What is term insurance cover?
Term insurance is a form of life insurance cover that pays the beneficiary, in the event of the death of the policyholder. While it is not easy to imagine how your family would manage in your absence, a term insurance cover helps to create a buffer that relieves them off the financial pressures. There are various types of life insurance plans you can buy but term insurance is the most affordable of all. A term cover does not offer a maturity benefit but provides your family with a sum assured amount at a cost-effective premium rate.
What are health insurance plans?
Health insurance is a general insurance
policy that covers your treatment expenses in the event of a medical emergency. There are various types of health insurance covers for different strata of people like individual health plans, family floater policies, critical illness cover, senior citizen plans, etc. They have different purposes and must be selected as per your requirement. However, you can also make a choice of more than one health insurance plan if your medical needs demand so. A health cover not only helps you manage the treatment costs, but also other pre and post hospitalisation expenses. The rising cost of healthcare expenses has made it necessary to have a health cover as part of your financial portfolio.
Difference between Health Insurance and Term Insurance
|Term Insurance Plans
||Health Insurance Plans
|Term insurance plans cover the life of the insured individual.
||Health insurance on the other hand cover the medical treatment costs in the event of hospitalisation.
|The pay-out is made on the death of the policyholder.
||Health insurance plans compensates the insured when a claim is raised for the treatment availed.
|Since a term insurance plan has no maturity benefits, the premiums are low.
||As compared to a term insurance cover, the premiums are higher for health insurance plans.
|Tax benefits are available under Section 80C of the Income Tax Act.
||Premiums paid for health insurance plans are deductible from your return of income as per Section 80D of the Income Tax Act.
|Term plans have a set policy tenure and thus, there are no benefits when it comes to renewal of the policy. However, this may differ based on terms & conditions of the policy.
||Health insurance plans offer a cumulative bonus on renewal for not making any claims.
These are some of the stark differences that you should know when it comes to term insurance vs health insurance plans. These policies serve completely different purposes and must be considered separately. In fact, your financial portfolio is better-off if both are combined to avail maximum benefits, a health insurance plan for ailments or a family health insurance
for all your loves ones, whereas term insurance for the times in your absence. There are various add-ons that can fine tune your health insurance plan. Take advantage of this and make sure you purchase an adequate health cover in case of medical emergencies. Now that you know how term insurance vs health insurance is different, make the most of it to secure your family’s future.