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Health Insurance Vs Term Insurance: Which One is Better?

Since life can be unpredictable, and we may have to face health scares and other misfortunes, it is necessary to take an insurance policy. Read this post to learn about the salient features of term insurance and health insurance plans.  

Taking an insurance policy is essential for everyone, but, with a wide variety of plans available, choosing the best one can be difficult.  Term plan and health insurance plan have their advantages and disadvantages, and therefore, it is vital to learn about them before choosing an insurance policy.

What is Term Insurance?

Term insurance is a type of life insurance that offers financial security to the families by providing them benefits in the event of the policyholder’s death. The high insurance coverage and low premiums make them an ideal choice of people with low disposable incomes. Some insurance providers can also cover disabilities and illnesses in case there is a loss of income.

Features of Term Insurance 

  • You can purchase term insurance for different durations according to your requirements like a 5-year term or 10-year term insurance.
  • Top-up options can give you a chance to increase your cover after the completion of a policy term.
  • With the Return of Premium option, all the premiums paid till the end of the policy term is returned if the policyholder survives the term.
  • By choosing the Income option of term insurance, the family can receive a monthly income along with a lump sum amount.
  • You can avail tax benefit under section 80C and 10D of the Income Tax Act 1961.

What is Health Insurance?

Health insurance is a medical insurance policy that covers the costs of hospitalisation and expenses associated with surgery. Regular preventive health checkups may also be covered under certain health insurance plans.

Features of Health Insurance

  • Health insurance can offer a lump sum benefit on diagnosis of several critical illnesses.
  • Tax benefits can be availed under section 80D of the Income Tax Act 1961.
  • On early detection of diseases like cancer, a premium waiver option is available wherein all premiums can be waived for a certain number of policy years.
  • Health insurance benefits may not be available for patients with congenital and pre-existing conditions.
  • Specialised health insurance plans for critical illnesses like cancer and cardiac diseases can offer customised coverage.
  • Indexation benefit may also be provided by insurance providers wherein sum assured may be increased if no claims were made during a policy term.

Comparison of Term Insurance and Health Insurance

Term insurance provides financial stability to the family in the event of the policy holder’s death or disability. Health insurance, on the other hand, covers medical expenses and hospitalisation benefits. The premium charged in term insurance is generally lesser than health insurance plans.

Health insurance can cover preventive checkups, and therefore, can promote healthy living. It can also cover a wide range of illnesses and treatment options. Term insurance may cover illnesses only if there is income loss due to the disease. Certain insurance providers also offer combo plans that offer term insurance policy and health insurance plan benefits in a single product. 

Given the rising medical costs and the struggle to deal with them, it is advisable to take a health insurance policy that has adequate coverage. For those with financial dependents, term insurance can be beneficial because they help in reducing the economic burden of the families after the death or disability of the breadwinners.

 

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