Difference Between Term Insurance and Health Insurance

Key Features of Term Insurance

1. Pure protection plan, providing only death benefits
2. No survival and maturity benefits
3. Premium is typically low, and coverage is higher
4. Provides financial protection to the family and income replacement during an unforeseen event.

Many term insurance plans now come with add-ons/riders and a return of premium plan. Add-ons include an accidental death benefit, critical illness, premium waiver, disability rider and critical illness rider. You can compare term insurance plans from various insurance companies on Jio Insurance Broking and make an informed choice.

Health Insurance – How Does It Work?

Health insurance is an insurance policy that provides financial protection against medical uncertainties. It covers the costs of hospitalisation, pre- and post-hospitalisation expenses, domiciliary care, surgery, day care procedures and more.

For example, let us consider Anvi, aged 30, who has availed a comprehensive health insurance coverage of INR 5 lakhs. Suppose she gets hospitalised during the policy period for severe dengue fever. The hospital bill mounts to INR 1.5 lakhs in 3 days of hospitalisation. In this case, her health insurance company makes a cashless settlement of the bill to the hospital before discharge.

Key features of Health Insurance

1. Provides a financial safety net during medical emergencies.
2. A cashless treatment facility at the network hospital protects your savings.
3. Policies are annually renewable and come with many add-on covers such as maternity cover, critical illness cover, outpatient/OPD cover, personal accident cover and more.
4. Claim-free years are rewarded with a no-claim bonus.

There are plenty of health insurance plans customisable as per your healthcare needs. Jio Insurance Broking platform allows you to understand various plans from different insurers, compare them side-by-side, and helps you make the right choice with cost-benefit analysis.

Difference Between Term Insurance and Health Insurance

Here are some of the key differences between term insurance and health insurance.

Term Insurance

• Term insurance provides financial security to the family in case of the policyholder’s death during the policy term.
• Pays the lump sum assured as death benefits
• Low premiums and higher coverage
• Purchased for a specific term (number of years) – (example 10 years, 20 years or 30 years)
• Provides tax benefits as per Section 80D of the Income Tax Act, 1961

Health Insurance

• Health insurance gives financial security to the insured in case of medical emergencies.
• Covers the actual medical expenses incurred
• Premium is relatively expensive and also can vary based on the age, coverage and health history.
• Typically valid for one year and renewable
• Provides tax benefits as per Section 80D of the Income Tax Act, 1961

Why Should You Avail of both Term Insurance and Health Insurance?

Both term insurance and health insurance are equally essential for any individual. Term insurance ensures your loved ones are financially secure even when you are not around. In case of untimely demise, the lump sum assured helps the family meet their daily expenses, future goals such as retirement corpus for spouse, children’s higher education or marriage and helps them pay off outstanding debt. It is important to get rid of misconceptions like “I am healthy and young, I don’t need term insurance”, and accept the fact that life is uncertain and one needs to be prepared for it.

On the other hand, having comprehensive health insurance coverage protects you and your family in case of any medical emergencies. Considering the rising healthcare inflation that can wipe out your years of savings, having adequate cover is important to preserve your long-term wealth from such unexpected expenses. Even if you have an employer-sponsored health insurance plan, a standalone health insurance plan is a must-have for continuous and extensive coverage.

Conclusion

To sum up, term insurance and health insurance are the essential costs one must incur, as both serve distinct purposes. One safeguards your family in your absence, and the other one protects you and your family during medical emergencies and gives financial stability while you are alive. You need to understand that the cost of not availing of term insurance and health insurance is greater than the small cost you incur today by paying a premium. However, choosing the right policies, assessing your coverage needs and going for adequate insurance coverage is extremely crucial.