How Is Term Insurance Different From Health Insurance
Updated On Jun 12, 2021
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Purchasing insurance is important for a financially stable and secure future. There are many types of insurance plans available with various benefits and features. To choose the best one for yourself, you must take note of your needs and circumstances and which kind of plan compliments them the best. Term insurance and health insurance plans are both popular forms of insurance.
Term insurance plans and health insurance plans both cater to different kinds of needs. Find out the differences between these two types of plans, in this article.
What is a Term Insurance Plan?
A term insurance plan provides protective cover and benefits for a certain period of time or the "term". They pay out a death benefit to the nominees if the policyholder dies before the end of the policy term. There are also rider benefits available. However, term insurance plans do not have maturity benefits under them.
What is a Health Insurance Plan?
A health insurance plan provides compensation for expenses incurred due to health problems. They also include post hospitalisation and care benefits. It is a great choice for anyone suffering from critical or terminal illnesses. It is specifically designed to provide for medical costs so that you can avail yourself of the best medical facilities.
Differences Between Term Insurance and Health Insurance Policies
The following are some of the key differences between term insurance policies and health insurance policies.
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Term Insurance Plan |
Health Insurance Plan |
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A term insurance plan provides cover for various situations with the help of riders and primarily, provides a death benefit on the sudden death of the policyholder. |
A health insurance plan is specifically designed to cover hospital costs and expenses related to the medical issues of the policyholder or the life insured. |
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The premium amount is usually very cheap and affordable. |
The premium is usually higher as compared to term insurance plans. |
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No maturity benefits are paid out under this type of insurance if the policyholder survives till the end of the policy term. |
There is no death benefit that is paid out under a health insurance plan. |
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The premium for term insurance plans are exempted under Section 80C of the Income Tax Act of India and the maturity benefit is exempted under Section 10 (10D). |
All premiums paid for the policyholder or the life insured is exempted from taxes under Section 80D of the Income Tax of India. |
Endnotes
Term insurance and health insurance are both important types of insurance plans. Although a term insurance plan might be more comprehensive (as it can cover certain medical expenses with the help of riders), health insurance plans are more specialised. Nevertheless, it is important to judge personal circumstances when choosing an insurance plan.
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