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Difference between Term Insurance and Health Insurance

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Published on June 11, 2021. EST READ TIME: 3 minutes

Insurance is financial aid to an unpredictable circumstance of life. The idea of insurance was to be able to provide protection to the ones who bear the loss due to an uncertain environment. The unforeseen situations can occur at any place to anyone at any point in time. With this understanding, an idea of recovery from the loss was invented which is now commonly known as Insurance.

There are various types of insurance like health, term, life insurance, insurance for any valuable product, vehicle insurance, travel insurance etc. But these three – term insurance, life insurance and health insurance are the one that provides assistance for human health or life loss. 

It is important to understand the basics of insurance policies before enrolling for them. After all, an informed choice reaps a better result. Products Insurance can help you to recover the loss of non-living entities by financial aid. But the uniqueness lies where they support the loss of living being like the demise of any family member or during the critical times. It is also a fact that there can be no recovery from loss of our loved ones but financial aid becomes important to keep the family intact. So let us understand the essence of each one.

Introduction:

Term Insurance policy

It is for a fixed term, like 20/40 years. Insurance companies provide financial assistance to the nominee of the policy holders, if the person dies within the term of the policy. It is also known as a pure protection plan, which means to provide protection for your family when the care taker has passed away. There can be no claim to the money, if the person survives till the maturity of policy tenure. 

Health Insurance policy

 It is to assist policy holders with their medical expenses. All the medical claims of policy holders or for their family members are covered in a Health Insurance policy. It helps a person in the need of their health emergencies which could be anything like cancer, tumour, surgery or even Covid-19 etc.

Types of Term Insurance Policies

• Level Term insurance plan

  During the entire term, the sum assured is unchanged and is paid to the family after the insured’s demise.

• Premium Refund Term insurance If the term ends and the insured survives, the premiums are refunded tax-free.
• Increasing Term insurance The death benefit increases each year through the term of the plan. With the increase in the sum assured the premium increases too.
• Decreasing Term Insurance The sum assured decreases by a fixed percentage every passing year, the premiums remain the same, but the risk cover is affected/reduced.
• Convertible Term Plan The insured by paying a little extra premium can get the plan converted to an endowment assurance plan.
• Term Plan with Riders Apart from the sum assured, the insured opts for additional coverage and benefits and in return strengthens his/her basic term insurance

Types of Health insurance Policies

• Individual Health Insurance:

      As the name suggests, Individual health insurance plans  are made for individual policyholders. The premiums are usually low under such plans, but there are various factors that determine the premium of a policy. Factors such as medical conditions, age, location, etc. influence the premium. 

• Family Floater Health Insurance:

      Instead of buying separate policies for every family member, a family floater plan  covers the entire family under one policy. Usually, parents and children (up to 2 children) are covered under this medical plan. Even though family floater plans have a higher premium than individual plans, the price is still cheaper when compared to the expenses involved in buying a different health insurance policy for each member.

  • Senior Citizen Health Insurance: 

  Medical insurance plans are specifically designed to cater to senior citizens who are 60 years and above. Senior citizen plans usually come with discounts and tax benefits. Though only a few insurers provide such policies, they are very useful. Also, these Senior Citizen Health Insurance  policies  may cost a lot higher than the health covers for younger consumers as senior citizens are more prone to diseases and illnesses.

  • Group/Employee Health Insurance:
  Such plans are usually offered by employers and are designed to include and exclude members as they join and leave the company. Group health policies are generally low in premiums due to the reduced risks involved. Such plans also allow leniency in terms of covering pre-existing illnesses among other things.

   

  Conclusion:

  Both health and term insurance plays an integral role in our lives. Health insurance covers your hospitalisation expenses and a term life insurance policy offers financial security to your loved ones after the sudden demise of the policy holder. Also, medical insurance helps to save taxes just like term life insurance . By investing smartly in a your comprehensive  health insurance plan  and making the most of the exemptions available to you, you can ensure that you don’t end up paying more Income Tax than you have to.

  Disclaimer:  The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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