Life Insurance V/S Health Insurance V/S Term Insurance

Unexpected events can happen to anyone, at any time, in any location. With this understanding, the concept of loss recovery was developed, which is currently known as insurance. Insurance provides financial assistance in the event of an unforeseen life event. The purpose of insurance was to safeguard those who suffer losses due to a tragedy. Health, term, and life insurance, as well as insurance for any valued item, car insurance, and travel insurance, are all examples of insurance. However, there are only three types of insurance plans that help with human health or death. These are term insurance, life insurance, and health insurance. Let’s learn about the insurance types in detail.

What is a Life Insurance Plan?

A life insurance plan is a contract between a policyholder and the insurer where the policyholder receives a payout based on the policy's maturity. Whether the life assured is living or dead, the payment will be made according to the agreement. The policyholder can specify the duration of the policy, and if they die before policy term completion, the money can be collected by the nominated beneficiary. 

What is a Health Insurance Plan?

A health insurance policy covers all medical claims made by policyholders or their family members. It aids a person in the event of a medical emergency, which could include cancer, tumours, surgery, or even Covid-19. Its purpose is to help policyholders with medical bills.

What is a Term Insurance Plan?

A term insurance policy is also known as a pure protection plan, which implies that it protects your family in the face of an unfortunate event. If the life assured dies within the policy's term, insurance companies would provide financial help to the nominee. It is for a set period of time, such as 20 or 40 years. However, if the life assured lives until the policy term completion, no maturity benefits are provided. 

Life Insurance V/S Health Insurance V/S Term Insurance

All three plans are pretty different from each other. Let’s take a look at the points of difference.

1. Policy Tenure - The duration of a term insurance policy can range from 10 to 35-40 years, while the tenure of a life insurance plan is generally between 5 to 30 years. In the case of a health insurance plan, the minimum term limit is 5 years and the maximum limit is 10 years.  

2. Coverage - Term insurance plans offer coverage to the life assured if he/she dies before the end of a set period of time. On the other hand, life insurance plans offer coverage until the policy matures. In case of health insurance plans, coverage is offered for medical claims within the policy tenure.

3. Premium - Being the cheapest plan among the three options, term insurance plans are quite affordable with low premium rates. On the other hand, life insurance premiums are higher than the term insurance premiums. Different from both the alternatives, the premium rate of a health insurance plan rises with the age of the life assured. 

4. Death Benefits - Under term insurance plans, it is only paid if the life assured dies before the policy matures. In contrast, life insurance plans provide rewards under both scenarios, if the life assured is alive or if he/she dies before the policy matures. There are no rewards under health insurance plans if the policyholder dies from the sickness without being admitted to the hospital.

Endnotes

Before purchasing an insurance policy, it is essential to understand the basics. After all, a well-informed decision yields a better outcome. Policyholders are served by all three policies in various ways. They all have advantages and disadvantages. The decision is entirely based on one's demands as well as a family lifestyle. 

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Disclaimer: 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.