Health Insurance Vs Life Insurance – Should You Buy One Or Both?
Insurance is one of the most intelligent financial safety nets that one can get. It cushions you and your family when life takes the unexpected toll on you, be it a sudden hospitalisation or the unfortunate loss of a breadwinner. Health insurance and life insurance are two of the most significant forms of insurance in India.
The question that people tend to ask themselves is: Should I purchase one or both? The solution is to comprehend what each of them can provide and how they can be used together.
Health insurance is designed to protect you against the rising cost of medical care. A health policy reimburses or directly covers hospitalisation expenses, medical procedures, day-care treatments, pre- and post-hospitalisation costs, and, in some cases, preventive care and wellness services.
Simply put, health insurance will also make sure that when you fall ill or get into an accident, it does not eat a hole in your savings.
Health cover does not have a one-size-fits-all solution. Insurers provide various policies based on your requirements and family condition:
This plan encompasses one individual. It is best when you would simply like a policy dedicated only to you, and the amount of sums insured is not divided among other people.
This plan is a favourite among families, and it includes several members under one sum insured. This is based on the assumption that not every member of the family may necessarily be in need of hospitalisation simultaneously.
This policy is a lump sum payout on the diagnosis of a given critical illness like cancer, kidney failure, heart attack and so on. The payout can be used for treatment or even non-medical expenses like household bills.
If you already have a base health policy but feel the sum insured is insufficient, a top-up plan gives you additional coverage at a lower premium. It’s useful when medical inflation is rising year after year.
Usually offered by employers, this covers employees under a common policy. While helpful, such plans may not be adequate once you leave the job or when family needs are higher.
On the other hand, life insurance insures your future financially as a family in the event of your unfortunate demise. Rather than paying your medical bills, it provides your dependents with money to sustain their way of life, settle debts or finance other aspirations such as the education of children.
Consider life insurance as a means of cushioning your family members against financial hardship in case you are not around to take care of them.
Just as with health cover, life insurance comes in several forms:
The purest and most affordable form of life cover. It pays a lump sum to your nominee if you pass away during the policy term.
Here, if you survive the policy term, the premiums you paid are returned to you. While costlier than standard term cover, it’s attractive for those who don’t like the idea of “losing money” on insurance.
These combine life cover with investment. A part of your premium goes towards life insurance, while the rest is invested in equity or debt funds. ULIPs suit those who want both protection and wealth creation.
These provide life cover along with savings. On maturity, you receive a lump sum along with bonuses, if declared.
This is coverage of your whole life (usually to 99 years), as the name indicates. It is a method of leaving a legacy besides enjoying the savings aspect.
Despite the similarity between the two in the sense that they both are insurance, their essence and advantages differ greatly. Let’s break it down:
Both provide tax benefits in Sections 80C and 80D of the Income Tax Act.
If you’re young and starting out, the question often arises - should you prioritise health insurance or term insurance?
The presence of the two policies forms a 360-degree safety net.
At ManipalCigna, payment of claims is not the only focus. Under the elaborate health insurance plans like Prime Senior, Sarvah, and Lifetime Health, you are entitled to:
Regardless of whether you have life insurance or are in the process of purchasing a policy, a sound health cover means that even in the event of a medical emergency, your financial stability will not be ruined. Nowadays, they are both vital - and combined, they guarantee you a hundred per cent peace of mind.
