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.
What is Health Insurance?
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.
Types of Health Insurance Policies
Health cover does not have a one-size-fits-all solution. Insurers provide various policies based on your requirements and family condition:
Individual Health Insurance
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.
Family Floater Plans
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.
Critical Illness Insurance
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.
Top-Up Health Insurance
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.
Group Health Insurance
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.
What is Life Insurance?
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.
Types of Life Insurance Plans
Just as with health cover, life insurance comes in several forms:
Term Insurance
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.
Term Insurance with Premium Return Feature
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.
Unit Linked Insurance Plans (ULIPs)
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.
Endowment Plans
These provide life cover along with savings. On maturity, you receive a lump sum along with bonuses, if declared.
Whole Life Insurance
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.
What is the Difference Between Health Insurance and Life Insurance?
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:
The Basic Premise
- Health Insurance: This is a coverage that covers medical fees in your lifetime.
- Life Insurance: A payout of a sum of money to your family upon your demise.
Reasons to Buy
- Health Insurance: To cover hospital bills and the increasing healthcare costs.
- Life Insurance: To protect the financial requirements and long-term objectives of dependents.
Coverage Terms
- Health Insurance: Active as long as you pay the premiums; renewable either on an annual basis or on a multi-year basis.
- Life Insurance: Coverage depends on chosen policy type (10 years, 30 years, or whole life).
Inclusions
- Health Insurance: Hospitalisation, surgeries, medicines, and critical illness (depending on plan).
- Life Insurance: Lump sum death benefit, occasionally maturity benefit (in case of endowment/ULIPs).
Tax Benefits
Both provide tax benefits in Sections 80C and 80D of the Income Tax Act.
- Health Insurance premiums: Deductible under Section 80D.
- Life Insurance premiums: Deductible under Section 80C.
Health Insurance Vs Term Insurance – Which Should You Buy?
If you’re young and starting out, the question often arises - should you prioritise health insurance or term insurance?
- When you have dependents (parents, spouse, children), → Life insurance is a must. It would guarantee that they do not suffer economic distress without you.
- In case you reside in a metro or a tier-1 city, → Health insurance is a need. As the medical inflation rate in India continues at close to 1 per cent per year, one hospitalisation can blow away years of savings..
- Ideally, the two: basis term plan and health cover are the safest options. Health insurance is your immediate future, whereas life insurance is the future of your family.
Benefits of Investing in Health and Life Insurance Plans
The presence of the two policies forms a 360-degree safety net.
Medical Insurance Benefits
- Network hospitals with no cash treatment.
- Medical inflation protection.
- Hospital insurance against major surgeries and critical illness.
- Wellness and preventive check-ups (in some plans)
- A sense of security that you are not going to run yourself out of savings in an emergency.
Life Insurance Benefits
- Gives your family financial security.
- Helps liquidate debts (home loan, personal loan)
- May subsidise the education of children or the retirement of a spouse
- Claims tax-saving benefits in Section 80C.
- In some plans, maturity benefits act as savings or investment returns
Who Should Buy Insurance?
Young professionals: Start with affordable term cover and a basic health plan. Premiums are lower when you are younger and healthier.
Families: A family floater plan for medical coverage and term insurance for the earning member is crucial.
Senior citizens: Specialised health policies cater to older age groups, while life insurance options may be limited but useful for estate planning.
Self-employed: Life insurance as well as health insurance take on a higher level of importance when people are not covered by their employer.
Insure Your Health with ManipalCigna Health Insurance Plans
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:
- Wide cashless hospital network across India
- Coverage for pre-existing illnesses after waiting periods
- Options for wellness benefits and preventive check-ups
- Financial protection against critical illnesses and long hospital stays
- Family-friendly floater options for wider coverage
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.
