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Is a Medical Loan Better Than Health Insurance?

Published On Apr 24, 2022

Suppose, you don’t have medical insurance, and you get hospitalized.Then you will either use your savings or borrow money from relatives, friends, or the bank, right? This is a medical loan. In both cases, you can get the best quality treatment, but in the latter case, you will be paying all the bills. If the treatment is long, you will need more money from acquaintances, which may cause a strain in the relationship. If you take it from a bank, the interest amount will add to your burden.

While you pay a premium in advance, whether you raise a claim or not, a medical loan is something you take when you need it. But there can be a significant difference between the amount you pay in premium and the amount you borrow. Medical loans can take time to process, and if you need to go in for an urgent surgery, this delay can cost you heavily.

Is a Medical Loan Better Than Health Insurance?

Why is Health Insurance Better than a Medical Loan?

Here are the key reasons:

  • Immediate medical facilities:

A medical insurance plan gives you access to medical facilities instantly. There is little paperwork or payment involved to get the treatment started. No time gets wasted in arranging for money.

  • Cashless treatment:

Your insurer will have a network of hospitals where you won’t need to pay anything upfront. You just need to provide your policy details and the treatment will start. So, even if you have little cash, it shouldn’t be a problem.

  • Network hospitals:

The benefit of having an insurer with a big network of hospitals is that you can find quality healthcare in your vicinity and get medical help without wasting time.

  • Unaffected credit scores:

Since you won’t be repaying any amount to the bank, there is no risk of delaying the payment and negatively affecting your credit score. Otherwise, it can impact your other loan applications for a car or home that you were planning to buy.

  • Affordable:

Health plans are way cheaper than medical loans, especially if the treatment goes on for a few days.

  • Extra benefits:

Not just hospitalisation expenses, your insurance will pay for your medical expenses before and after hospitalisation too. The other benefits include free health check-ups, availability of top-up plans, daily hospital cash allowance, and coverage for alternate therapies among many others.

  • Save tax:

Paying premiums towards medical insurance will help you get a tax rebate under Section 80D of the Income Tax Act. If you are not 60 years or above, you can avail a maximum deduction of Rs 25,000, while for senior citizens, the upper limit is Rs 50,000.


By now, it must be clear to you that a medical loan can’t replace a medical insurance plan. During annual financial planning, set aside an amount for the health insurance of all family members. It doesn’t cost much but can save the day when you need quality healthcare.

Also read- What are the benefits of reviewing your health insurance plan once a year?

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This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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