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Which is Better Health or Term Insurance?

If you are planning to buy a mediclaim policy for family and are wondering should you buy it even if you a term insurance policy? Well, both health and term insurance plays an integral role in our lives, especially when the cost of medical treatment in India is on a constant rise. While health insurance covers your hospitalization expenses, a term life insurance policy offers financial security to your loved ones after the sudden demise of the policy holder.

But this always debatable should you a health insurance policy or a term insurance policy. Well, both serve their specific purpose; here is a quick rundown of both of them to help you decide better:

The Need For Term Insurance

If you do not want your loved ones and dependents to suffer in case of a sudden demise, then you

should consider buying a term insurance policy. To secure their future in your absence you must consider buying term life insurance cover.

It will offer financial security and will help your dependents continue living a similar lifestyle. There are

various 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 your untimely death can lead your family in a financial trauma then you should definitely get a term insurance policy.

The Need For Health Insurance

Health is wealth goes the old adage. 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 still remain unpredictable.

It is wise to get a medical cover with an adequate health insurance policy if you do not want to run from pillar to post to arrange funds at the eleventh hour.

It not sensible to pay expensive hospital bills, when you can buy a medical insurance policy to reimburse your healthcare expenses. There is no worrying about arranging the funds to avail of the best medical treatment. You just need to pay the premium every year to avail of the benefits.

But before purchasing a mediclaim policy for family or for yourself, you should compare different policies based on your needs and then select the one.

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 plan the sum assured remains same throughout the policy term
  • Term Insurance with Return of Premium (TROP) – This variant of term plan returns your premium that you paid throughout your policy term. The premium is payable at the end of the term if you survive the policy period. 
  • Premium Refund Plan– If the insured survives the policy term, the premiums refunded is tax-free.
  • Term Plan with Riders– You can opt for additional coverage benefits like waiver of premium, critical illness rider to enhance your basic term insurance coverage.
  • Convertible Term plans– The plan can be converted into a whole life insurance or an endowment plan.
  • Increasing Term 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 and is helpful in case you have an ongoing loan or mortgage.

Types of Health Insurance Policies

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

  • Individual Health Insurance- An individual health plan offers coverage to only one individual i.e. the policyholder, who will avail the benefits of the 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 family members including spouse, children, and parents. For example, Care Plan by Religare health insurance offers comprehensive cover to your family members under a single sum assured.
  • Senior citizen Health insurance- Such health plans are designed to offer medical cover to elderly people above the age of 60 years.
  • Group Health Insurance- Group health insurance is usually provided by an employer or a company to its employees.
  • Critical Illness Insurance- The cost of treatment for critical illnesses is quite exorbitant. It covers life-threatening diseases such as cancer, kidney failure, cardiovascular diseases, etc.
  • Top-Up Health Insurance Plans-You can buy them along with your current health plan. It will prove to be useful upon exhaustion of the threshold limit of your base medical insurance policy.
    Benefits of Term Insurance Plans

Benefits of Health Insurance Plans

Below are some of the expenses that are covered under a mediclaim policy:

  • A health insurance policy covers pre and post hospitalization expenses up to the sum insured limit
  • Some plans offer maternity Benefit that covers delivery expenses and new-born baby medical expenses
  • Home (Domiciliary) Hospitalizationexpenses are also covered under some plans
  • Pre and post hospitalization expenseslike X-rays, scans, medicines, ambulance, daycare procedures, ICU, OT, diagnostic fees, etc. are covered
  • Critical Illness Covercan be bought as an add-on or as a standalone product

Difference between Health Insurance and Term Insurance Plans

Term insurance Health insurance
It offers financial protection the dependents of the insured person It pays for the medical expenses of the insured members
The sum insured is paid to the nominee in case of the death of the policy holder The sum insured amount is paid to the insured person to be able to pay for hospitalization expenses in case of an accident, illness, or injury
The premium charged is nominal The premium charged is comparatively high
The premium is paid annually The premium is paid annually
If the policy holder survives the policy term and opts for a premium return plan then the insurer will pay you the premiums paid at the end of the policy-term. There is no provision to get the premium amount back. However, there is a No-claim-bonus benefit for not filing a claim during the policy period.
The rider benefits include the waiver of premium, critical illness rider, accidental death and permanent disability riders There are various rider benefits like critical illness cover, worldwide treatment cover, maternity cover, etc.

Both health and term insurance policies come with a lot of add-ons and benefits; it is important to look out for them with the right insurance company.

To sum it all, if you compare the benefits of both, you will understand the need for both term and health insurance, sooner or later. It is better to make an informed at the right time before it’s too late.

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