Difference Between Term Insurance and Health Insurance

Difference Between Term Insurance and Health Insurance

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During this pandemic, everyone understood the real value of human life. The crisis taught us to invest in insurance and protect our near and dear ones from facing any type of financial crisis. Insurance will help you in all stages, such as emergencies, or provide you with cashless benefits, wellness programs, death cover, and many more. 

Difference Between Term Insurance and Health Insurance

Two types of insurance scrolling up in the market in current times are term insurance and health insurance. This article will discuss the difference between term insurance and health insurance

Meaning of Term Insurance

Have you ever thought about what will happen to your family if you are suddenly gone? You always want to save your family from any miserable circumstances. Hence, the solution to this problem is term insurance.

In your absence, the term insurance takes care of all the family’s financial needs. Coverage in term insurance is for the beneficiary/nominee of the insured person.

The primary purpose of term insurance is to provide financial support to the insured’s family in case of the unfortunate death of the insurer. The amount of compensation is decided by looking at the duration of term insurance when availing of the insurance plan.

Health Insurance Meaning

Heath issues remain unpredictable. You take very good care of your health and still can get health issues at any time of the year. Hence, getting medical cover with a proper health insurance plan is wise and advisable. It is not practical to pay expensive medical bills. Instead, opt for a medical cover or a good health insurance plan. A health insurance policy will reimburse all your healthcare expenses. The amount of compensation is covered by the terms and scope of the health insurance policy.  

The primary purpose of health insurance is to protect you from any unforeseen or large medical expenses. Coverage in health insurance is limited to the actual expenses that have been incurred or the sum insured based on whichever is less.

Types of Term Insurance and Health Insurance

Types of Policies Under Term Insurance

Term insurance premium policies have been divided into different types, such as:

Level Term Insurance Plan

In this type of plan, the sum assured remains unchanged, and the family receives the amount after the insured person’s demise.

Increasing Term Insurance

Through the term/duration of the plan, the death benefit increases every year. Hence, with the increase of the paid sum amount, the premium amount also increases.

Premium Refund Term Insurance

In case the term ends and the insured person survives, then the premium amounts are refunded tax-free.

Convertible Term Plan

By paying an extra sum, the insured person can convert their ongoing term insurance plan to an endowment assurance term plan.

Decreasing Term Insurance Plan

The assured amount keeps on decreasing every year by a fixed percentage. Though the premiums remain the same, the risk cover gets affected or reduced.

Term Plan with The Riders

Apart from the assured sum, the insured person can opt for additional coverage as well as benefits. The insured can, in return, strengthen the basic term insurance.

Types of Policies Under Health Insurance

Health insurance has been divided into the following types:

Single Person/individual Health Insurance

As the name suggests, single-person health insurance covers only a single person.

Family Health Insurance Policy

The entire family is covered under the same plan, along with the insured person. The premium is paid annually. Some family plans allow a man to include their spouse’s parents.

Unit Linked Health Insurance Plan

The insurance companies provide investment and coverage in this unit-linked insurance.

Health Insurance Plan for Senior Citizens

Senior citizen health insurance plans are generally planned for aging parents.

Benefits of Term Insurance and Health Insurance

Benefits of Term Insurance Plans

  • Term Insurance Plans are basically financial support for your family when you are gone from their lives.
  • The premium amount is comparatively very less.
  • Term insurance tax benefits are very high. However, to get term insurance, the sole purpose should not be tax savings. But your family’s safety cover.
  • High-term insurance maturity benefits with low premiums.

Benefits of Our Health Insurance Plans

  • With the help of health insurance, you can get protection against medical expenses.
  • Restoration benefits are offered by the insurance provider means if your sum gets exhausted at the time of treating an ailment, the insurance company restores it.
  • A proper cover for critical illness is provided in health insurance. An add-on is made to cover the hospital expenses in case of critical illness.
  • Maternity Benefit- If you opt for maternity benefit, all your hospitalization and other related expenses related to mother-to-be will get covered.
  • Daily Cash Cover for Hospitals- In case of a medical emergency, you can manage the expenses beyond the hospital bill.
  • Accidental Hospitalization Expenses- This benefit will cover the ambulance costs, pre-hospitalization, daycare products, and post hospitalizations expenses.

Major Difference Between Term Insurance and Health Insurance

Term insurance and health insurance are both needed for a smooth financial life both for yourself and your family. Some of the major differences between both of them are:

Objective

The primary purpose of term insurance is to provide financial support to your family after your death.

Health insurance covers all your as well as your family’s medical expenses and protects you from getting into any financial crisis.

Premium for Policies

The premium amount specified for term insurance is minimal and affordable.

The premium for health insurance is a bit costly, especially after a certain age.

Benefit of Renewal

There is no benefit of renewal in term insurance. You generally pay the same amount every year. 

On the other hand, under the health insurance policy, there is no claim. There is only No-Claim Bonus (NCB) in the next renewal.

Tax Benefit

The term insurance premium is deductible from the income of the person as per Section 80C of the Income Tax Act, up to a limit of Rs. 1,50,000. The health insurance premium gets deducted as per Section 80D of the Income Tax Act.

Similar Benefits of Term Insurance and Health Insurance

Payment Process

The payment can be a one-time premium, regular or partial one. This is usually pre-decided by the policyholder as per the plan offered by the insurance company.

Purchase of Policy

The policies can be purchased online.

Transferable

All the specific policies can be transferred from one provider to another. The provider does not need to pay any extra charges.

Tax Exemption

Both the policies have been exempted under the Income Tax Act up to a certain amount.

Why Should You Choose a Vital Health Insurance Plan?

Vital has introduced a health plan keeping in mind all your health as well as wellness needs. Vital Health Insurance Plan is priced 70% lower than the other health insurance plans and is planned to look at your convenience. 

The health and wellness package includes both individual and family with:

  • Provides covers for 6 members, including parents/parents-in-law
  • Coverage to COVID-19 treatments
  • All expenses of hospitals, including pre- as well as post-hospitalization
  • Ambulance charges and many more

Conclusion

To sum this, if you closely try to understand the benefits of both the policies, you will understand that sooner or later we need these policies. Hence, it is better to make smart choices at the right time before it gets very late.

Health insurance policies have lots of benefits as well as add-ons. Hence, it is important to choose the right insurance company. We at Vital believe in providing the best add ons as well as benefits to our customers. Our main purpose is to help the customers with most of their policies.

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