War of the Insurance Policies – Health Vs Term Insurance

‘Health is wealth’ is perhaps the oldest and wisest of adages. A wise person is one who ensures both physical health and financial health. Such a person definitely understands the pivotal role Health insurance and term insurance plays in providing financial protection and peace of mind. If you are new to the world of insurance, your induction should start with understanding the difference between health insurance and term insurance so you can make informed decisions about safeguarding your finances against unexpected emergencies. Read on to learn about the features and benefits of term insurance vs health insurance and why you need both.

What is Health Insurance?

Health insurance is simply an assurance your insurance company provides under which it agrees to bear your medical expenses in case you are hospitalized and need treatment. The insurer covers your costs up to a specific amount called a ‘sum insured’. Insurers charge you an annual fee or premium for the coverage they provide. In turn, your only job is to only ensure that your renew your policy on time, year after year, to enjoy the insurance coverage.

What is Term Insurance?

Classified as a type of life insurance product, term insurance is a facility under which your insurer pays you a fixed sum in case of an unprecedented event like an accident leading to loss of employment or disability, and compensates your family if the absence causes your untimely death. The sum insured under a term policy serves as a financial cushion, allowing you to fulfil your financial obligations despite the loss of income, while also ensuring that your family is looked after financially in your absence.

Types of Health Insurance Policies

Health insurance policies are categorised into several different types, including:

Individual Health Insurance: This plan covers medical expenses for a single person, with a predetermined, non-transferable sum insured.
Family Floater Plans: This is a type of medical policy for your family, typically covering 4-6 members under a single policy.
Senior Citizen Health Insurance: This health insurance policy is designed for individuals above the age of 60 years with age-specific health concerns.
Critical Illness Plans: These plan cover the costs associated with major illnesses like cancer, heart disease, etc., through the high sum insured.
Group Health Insurance: Also known as employee health insurance plans, these are provided by companies to their employees, and may also cover their families.
Maternity Insurance: This plan covers various kinds of pregnancy-related expenses, ensuring financial support during childbirth.
Personal Accident Plans: These plans provide financial support in case of accidental injuries and include a death benefit for your survivors.
Top-up and Super Top-up Plans: These plans enable you to increase your existing policy’s sum insured limit significantly by paying a paltry sum.

Types of Term Insurance Policies

Term insurance policies come in many forms, helping you fulfil your varying needs. Some common types of term plans are as follows:

Level Term Plans: These guarantee a fixed sum assured throughout the policy term, providing constant coverage.
Decreasing Term Plans: These are ideal for loan protection, as the coverage amount decreases over time.
Convertible Term Plans: These provide flexibility by allowing changes to your endowment or whole life plans later.
Return of Premium Plans: The insurer returns the premiums paid if you survive the payment term.
Term with Riders: These include additional benefits like critical illness or accidental death coverage for enhanced protection.
Group Term Insurance: Employers provide this for employees in specific sectors, ensuring financial security for their families.
Joint Life Term Insurance: These plans cover two individuals under a single policy, with the sum assured paid on the death of either insured.
Increasing Term Plans: These offer an increasing sum assured by considering inflation and increasing financial needs over time.

Benefits of Health Insurance Plans

The following are the key benefits you can enjoy under a typical health insurance policy :

Medical Expenses Coverage

Your health insurance policy covers various medical expenses, including hospitalization charges, doctor’s fees, medication costs, and the charges associated with diagnostic tests.

Preventive Care

Some health insurance plans also cover precautionary healthcare measures such as vaccinations and annual, routine health check-ups .

Cashless Treatment

Most health insurance policies provide a cashless treatment benefit at network hospitals, wherein the insurer’s representative deals directly with the hospital to pay your bills.

No-Claim Bonus

With the no-claim bonus benefit in health insurance, your insurer increases your sum insured amount by 10% to 50% for every consecutive claim-free year, up to 5 years.

Benefits of Term Insurance Plans

Following are the main benefits of purchasing a term insurance plan:

Financial Security:

Term insurance provides a lump sum amount to your nominee in case of your unfortunate demise, ensuring the financial security of your family.

Affordability:

The premiums charges against term insurance plans are usually lower premiums compared to other life insurance products, making them more affordable.

Flexibility:

Insurers gives you the flexibility to choose the policy term and coverage amount based on your financial goals and family needs.

Convertible Options:

Some term insurance plans provide you with the flexibility to convert the policy into an endowment or whole life plan at a later stage.

Difference Between Term Insurance and Health Insurance Plans

Feature	Term Insurance	Health Insurance
Purpose	Provides a lump sum amount in case of your untimely death.	Covers medical expenses and hospitalization costs.
Policy Term	Typically ranges from 5 to 40 years.	Generally renewable annually or for a specified term.
Premiums	Generally, costs lower premiums compared to health insurance.	Premiums are based on factors like age, health condition, and coverage.
Maturity Benefit	No maturity benefit: the insurer pays the sum assured on the death of the insured.	Insurer may offer a no-claims bonus but there’s no maturity benefit.
Coverage	Provides financial protection to the family in the event of the insured’s death.	Covers medical expenses, hospitalization, and related costs.
Add-on	You can improve the coverage under the policy with add on benefits like critical illness cover, accidental death benefits, etc.	You can improve the scope of the policy through add-on plans like accidental death cover and permanent disability cover.
Returns	If you choose the return of premium benefits option and survive the policy term, you receive the premiums paid towards the policy as maturity benefit.	The clause of returning premiums does not exist under a Health insurance policy.
Tax Benefits	You can avail of tax deduction benefits of up to ₹150,000 per annum under Section 80C of the IT Act, plus additional deductions on the sum assured earned throughout the policy’s term under Section 10 (10D).	You can enjoy tax deduction benefits of up to ₹100,000 per annum for buying health insurance for your family and parents, under Section 80D. You can also enjoy deductions under Sections 80DD, 80DDB and 80U.

How to Buy Health Insurance?

To buy a health insurance policy in India, you can follow these simple steps:

a) Assess Your Needs: You must first understand your specific health coverage requirements, considering family size, age, and medical history.

b) Research Plans: Compare different health insurance policies from various insurers, focusing on coverage, premiums, and network hospitals.

c) Check Inclusions and Exclusions: Understand what the policy covers and excludes, such as pre-existing conditions or specific treatments.

d) Calculate Premiums: Evaluate the premium costs based on coverage and benefits offered.

e) Apply and Pay: Fill and submit the application form, by providing accurate information and pay the premium.

In some cases, insurers may ask you to undergo a medical test after which they may approve your application. Once it is approved you will receive your health insurance policy documents.

How to Buy Term Insurance?

To purchase a term insurance you must follow these straightforward steps:

a) Check Your Requirement: Decide the coverage amount and policy term based on your financial responsibilities and family needs.

b) Compare Policies: Compare term insurance plans from different insurers, considering premiums, features, and claim settlement ratios.

c) Provide Accurate Information: Fill out the application form honestly, disclosing your medical history and lifestyle details.

d) Calculate Premiums: Understand the premium costs associated with your chosen term insurance plan.

e) Submit application and make the payment: You can now submit the duly filled form and pay the premium charged against your policy.

Term insurance providers may also ask you to undergo a medical check-up, especially if you buy the policy late in life. If you are deemed eligible they will approve your application.

Protect Your Finances and Your Health – Choose Manipal Cigna Health Insurance

Both term insurance and health insurance play important roles in financial planning. These are investments you should not postpone if your wish to secure yourself from the financial costs arising due to accidents, medical emergencies, and other unforeseen circumstances. If you are looking for excellent health insurance policies with substantial coverage and higher sums insured, your search ends with Manipal Cigna Health Insurance. At Manipal Cigna, we offer an extensive range of health care plans and the convenience to buy the policies online.