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Difference Between Term and Health Insurance Plans: An Overview

Nowadays, the use of insurance has become extremely crucial for planning financial freedom. Although even after being aware of the same, the struggle is to choose between the different types of policies that are available today. In the midst of such chaos, the intention is always to choose the type of insurance policy available that offers maximum coverage and additional benefits.

Among many of these policies available, the two most debated that people consider using are term life insurance vs health insurance Politics. Although policies such as term life insurance can save you and your family a huge financial burden in the event of your death, medical insurance can help provide financial security by paying off your hefty medical bills. . With the help of this article, we can explore the main benefits of both types of fonts, understand their differences, and ultimately help you decide which font is right for you based on your needs.

What is a term life insurance plan?

A term insurance plan can be defined as a contract between an insured and an insurance company. Such insurance helps policyholders by providing financial compensation in the event of the unfortunate circumstance of the death of the holder. Therefore, acting as an aid to the family members of these policyholders in case of difficulty.

Term insurance is generally purchased for a fixed term and is generally convertible into permanent life insurance. A term life insurance plan has proven useful for many reasons. For example, if you want to be safe in times of uncertainty and free your family from undue misery in times of unfortunate circumstances. Plus, if you’re the sole breadwinner in your family, pre-planned term life insurance can literally save your life.

Let’s look at some of the benefits of term insurance.

  • A term insurance policy obviously helps you establish a sense of financial freedom for you and your loved ones by providing financial security.
  • Term insurance is attractive because it is more affordable than other life insurance policies available. To start a premium on term life insurance, you can easily do the same at the age of 18 with the minimum amount between Rs 400-500 on life cover up to Rs 1 crore.
  • It also helps you take advantage of tax benefits. Indeed, according to Section 80C of the Income Tax Act 1961, an insured person can claim a maximum deduction of 1.5 lakhs from his total income to reduce his tax liability.

What is a Health Insurance Plan?

Health insurance as its name suggests covers the expenses related to the health of the insured as proposed by the insurance company. Such contracts pay for the heavy medical bills and costly surgeries of the policyholder and save these people enormous financial distress. You can avail health insurance and start the premium on it according to your age and financial need. You can also choose from many types of health insurance policies available in the market, ranging from a family health insurance plan, unit-linked insurance, or even different insurance for your parents or grandparents. -senior parents with additional benefits.

Let’s see some of the reasons to avail a health insurance policy

  • A health insurance policy helps you cover hospitalization costs. Especially if you seek private care for the required treatment, you may end up with huge medical bills, which will cause you extreme financial stress. Health insurance can help you out.
  • You can avail of a no-claims health insurance policy to ensure that you will not lose your premium amount, in case your health insurance benefit is not used in a year .
  • Maternity claims and critical illness coverage that come with health insurance can help save your savings because they come with huge expenses. It is therefore extremely important for you to analyze the requirements of your health policy

Difference Between Term Insurance and Health Insurance Plans

  1. The objective of the policy: Both the insurance policy provides its holder with the achievement of different goals. Term life insurance covers you for a death benefit for a set period of time, while the purpose of health insurance is to save you from huge medical bills while you go through an illness or injury. Term insurance is primarily for your family to provide financial security after death, while medical coverage helps reduce your financial outlay for your and your family’s health.
  2. Policy cost: Term life insurance is usually less expensive than most policies available. Although given the high cost associated with medical expenses today, the premium for health insurance is likely to be higher than for term insurance.
  3. Advantage of renewal: While for term insurance, you will have to pay the same premium every year, many health insurance policies offer you a claim-free policy, which helps you renew your policy by claiming such a bonus and avoiding the extra cost and the loss on this premium, which will not be available in the case of term insurance.
  4. Fiscal advantages: Although both insurance policies provide tax benefits to the insured, term insurance is covered by Section 80C of the Income Tax Act 1961, while sickness insurance is covered by Section 80D of the Act.
  5. Maturity Advantage: A term life insurance policy provides you with the maturity benefit in the event the term of the policy expires, while health insurance does not provide you with the same benefit.

Top 5 Health Insurance Plans in India as of August 2022

Here are the top 5 health insurance policies available in India. Please note that the figures are subject to change according to the terms of the insurance companies

Policy name Amount insured Age limit Number of hospitals covered
Aditya Birla, Active Health Platinum Enhanced Plan 2 lakh to 2 crore 91 days-No limit 10,000+
ICICI Lombard comprehensive health insurance policy 1 lakh to 50 lakh 91 days -18 years 6,500+
HDFC ERGO, Suraksha Women’s Health 3 lakh to 24 lakh 18 years old-No limit 13,000+
STAR Health Seniors Red Carpet Health Policy 1 lakh to 25 lakh 60-75 years old 12,000+
Youth Care, Health Insurance Plan 3 lakh to 25 lakh 18-35 years old 19,000+

Top 5 Term Life Insurance Plans in India in August 2022

Take a look at the top 5 term life insurance policies available in India. Please note that the figures are subject to change according to the conditions of the insurance companies.

Plan name Entry age Policy Duration Sum insured Claims payout ratio
LIC technical term 18 to 65 10 to 40 ₹50,000,000 96.69%
HDFC Click 2 Protect Plus 25 to 65 5 to 85 ₹10,000 99.07%
Max Life Smart Secure Plus Plan 18 to 65 10 to 67 ₹20,000 99.35%
Electronic shield SBI Life 18 to 65 5 to 80 ₹35,000 94.52%
Tata AIA Maha Raksha Supreme 18 to 65 10 to 40 ₹50,000,000 99.06%

Although both types of insurance policies have their fair share of benefits, it is generally advisable to take advantage of both or extend the benefits of one policy to cover the maximum possible. Although term insurance can be extended with medical coverage, it cannot, however, provide you with large sum coverage on medical bills. Hence, keeping in mind the benefits as well as the need of the hour, you can opt to start the premium on the selected policy as per your convenience but it is advisable to do so as soon as possible.

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