The uncertainties of life always encourage us to make wise decisions and begin with robust investment planning for the future. Investing in term insurance and health insurance plans should be an integral part of your financial portfolio.
It is advisable to buy term insurance and health insurance policies before investing in instruments like stocks, unit-linked insurance plans, and mutual funds, among others. It is because life has no guarantee, and the cost of hospitalization can impact your savings.
Investing in random insurance policies results in more chaos. So, you may face difficulty in making an informed decision. Before you proceed with financial planning, it is essential to know the difference between health and life insurance term plans. Having a sound knowledge about this will ensure that you can continue doing your investment planning with ease.
About term insurance
Term insurance plans in India are designed to provide financial safety to the policyholder’s family after his or her demise. The insurance company disburses a pre-specified lump sum to the family. For example, if the father dies, the family members whom he had selected as nominees will receive the sum assured of the term insurance plan.
Key features
- Coverage
The insurer provides coverage to the beneficiary in case of the policyholder’s premature demise.
- Duration
It may range between five to 40 years.
- Premium
A term plan comes at the cheapest premium compared to other life insurance plans.
- Monetary benefits
This plan only offers a death benefit if the policyholder dies during the policy period. It does not offer any maturity benefit on survival.
Advantages
A term plan acts as a financial cushion for your loved ones if an untoward incident results in your absence. Here are a few plus points of term Insurance plans in India:
- They offer a high sum assured at a nominal premium
- They come with tax exemptions
- They provide the opportunity to buy riders separately
About health insurance
Health insurance plans are an agreed pact between the life insurance term plans company and policyholder. As per this contract, the insurance company covers the policyholder’s medical costs. In return, the insurer receives a fixed premium from the policyholder. When a medical emergency arrives, health insurance supports you financially.
Key features
- Coverage
It covers medical expenditures, such as diagnostic procedures, medications, hospitalization, and visits to the doctor.
- Duration
Insurers offer health insurance with a minimum tenure of one year.
- Premium
It depends on your age and health situation.
- Purpose
The insurer does not provide any monetary value if the policyholder passes away during the policy tenure. They only pay the benefit if you file a claim due to medical urgency.
Advantages
Some important highlights of a health insurance policy include:
- Restoration benefit
Restoration benefit is classified as an added advantage in a health insurance plan. If the sum insured exhausts while treating an illness, the insurance company restores it.
- Maternity benefit
When a mother-to-be is admitted to a hospital for delivery, the health insurance plan will cover all the hospitalization expenses. Even if any complication arrives, the insurance company will bear all the related expenses. However, you need to opt for this facility to get coverage.
- Home hospitalization
If the policyholder is unable to take treatment in a hospital but seeks treatment via home hospitalization, the insurance company covers the expenses during such events.
- Accidental hospitalization
Health insurance may also cover ambulance costs, pre-hospitalization, post-hospitalization expenses, and daycare procedures. These include costs related to the Intensive Care Unit (ICU), Operation Theater (OT), medication, physician’s fees, and diagnostic tests in case of an accident.
This explains to you the difference between a health and a term policy. It is no surprise that both plans have many pros. Consider investing in a term plan to secure your family’s financial future. Simultaneously, buy a health insurance policy to safeguard your savings from the rising costs of medication and hospitalization.
