Health Insurance vs Term Insurance: What’s the Difference and Which One Do You Need?
When planning your financial security, choosing the right insurance is a big step. Most people get confused between two important types of insurance: Health Insurance and Term Insurance. Though they both provide financial protection, their purpose and benefits are very different.
What is Health Insurance?
Health insurance is a policy that covers your medical expenses. Whether it’s a doctor visit, surgery, hospital stay, or medicine — health insurance helps you pay the bill.
Most policies also offer cashless treatment in network hospitals, which means you don’t need to pay upfront during emergencies.
What is Term Insurance?
Term insurance is a life insurance product. It provides a lump sum amount to your family if you pass away during the policy period.
There is no return if you survive the term — but the premium is very low and the coverage is very high.
Key Differences: Health vs Term Insurance
| Feature | Health Insurance | Term Insurance |
|---|---|---|
| Purpose | Covers medical expenses | Covers death risk |
| When Paid | When hospitalized or treated | If the insured person dies during policy |
| Benefit To | Policyholder | Family/nominee |
| Maturity Benefit | No (in regular plans) | No (unless return of premium plan) |
| Tax Benefit | Under Section 80D | Under Section 80C |
Why Should You Buy Health Insurance?
- Medical treatments are becoming expensive day by day.
- One major surgery can cost lakhs without insurance.
- Health plans offer cashless treatment options.
- You get tax benefits under Section 80D.
- Peace of mind during health emergencies.
Why Should You Buy Term Insurance?
- Ensures your family stays financially secure after your death.
- Offers high coverage at low premium.
- Helps in loan repayment and children’s education.
- Premium is low if you buy early and are healthy.
- Tax benefits under Section 80C.
Health + Term Insurance: A Perfect Combo
Both policies protect you in different ways. Health insurance helps with hospital bills today, while term insurance protects your family tomorrow.
Experts recommend having both policies to stay fully protected.
How Much Coverage is Enough?
For Health Insurance:
Try to get a coverage of at least ₹10–20 lakh per person, especially if you live in a metro city.
For Term Insurance:
You should ideally have 10–15 times your annual income as life cover. If you earn ₹8 lakh per year, go for at least ₹80–₹1 crore term plan.
Mistakes to Avoid
- Waiting too long to buy insurance.
- Choosing low coverage to save premium.
- Ignoring riders like critical illness or accidental death cover.
- Relying only on employer’s group insurance.
Conclusion
Both health insurance and term insurance are essential tools for financial planning. They’re not substitutes — they complement each other.
Don’t wait for an emergency. Start early, get covered, and live with peace of mind knowing you and your family are protected.
FAQs: Health vs Term Insurance
Q. Can I buy both health and term insurance?
Yes, in fact it is recommended to have both for full protection.
Q. Is term insurance better than health insurance?
No. They serve different purposes. You need both for complete coverage.
Q. What is the right age to buy insurance?
The younger you are, the lower the premium. Start as early as possible.
Q. Does health insurance cover critical illness?
Only if it is included in the plan or added as a rider.