It is a universally accepted truth that life is highly unpredictable. To give yourself, and your family, a financial safety net, you may have invested in an insurance plan. Life Insurance vs Health Insurance may seem to be confusing if you haven’t read about it before, it may seem like a complex task. But believe us, it isn’t.
If you are struggling to understand the difference between life and health insurance and are wondering what to get, we are here to help. We’ve simplified both of them for you. Before we do explain the difference though, there are a few key things to know.
The first is that it is wise to opt for both life and health coverage. Both are integral to your and your family’s future. Under Section 80D of the Income Tax Act, the premium amount is tax-deductible for health insurance. Under Section 80C, you can avail of tax benefits for paying a premium towards life insurance.
If it does seem difficult to afford the premium for both, it is wise to opt for a smaller cover. Your cover amount will depend on your health, occupation, age and family status.
Life Insurance vs Health Insurance
The best way to find out how much coverage you need is to follow these 4 steps:
- Know your family’s income and expenses
- Calculate one-time expenses (college tuition, wedding, car loan pay off, home loan pay off, etc.)
- Calculate the value of your current assets
- Do the math: requirement – existing assets = coverage needed
It is wise to get an insurance policy as soon as you can afford it. Don’t wait till it is too late, the premium will cost more. Irrespective of your age, family status, and job, it is a smart idea to get both life and a health care plan.
Understanding Health Insurance
In layman’s terms, a health insurance plan is a contract between you (insurer) and the insurance company. The company provides you with a financial cover for your unforeseen medical emergencies (including any pre-existing diseases). In return, you pay a fixed premium amount yearly (or even monthly).
As per the Insurance Regulatory and Development Authority of India (IRDAI) circular – Ref. No: IRDAI/HLT/CIR/MISC/093/04/2020, it is mandatory for companies to offer employee healthcare benefits. So, chances are, you are already covered. Be sure to check with your company what plan they provide.
If you have a health cover, then any expenses you incur on hospitalization (subject to the terms and conditions) can be reimbursed. You can also get add-ons like maternity and home hospitalization should you require them.
Some key features of health insurance are:
- Covers the cost of hospitalization, as well as pre and post-hospitalization expenses (subject to T&Cs).
- There are no benefits gained at the end of the term. Health insurance is limited to reimbursing the cost of your medical expenses.
- They are usually short-term plans (between 1-3 years) that need to be renewed.
- Due to their short-term nature, premiums are usually fixed and paid for in a single lump-sum amount.
Understanding Life Insurance
Life insurance works a little differently. Rather than covering any costs, life insurance covers you as an individual. In the unfortunate event you pass away, life insurance will replace the lost future income. That way, your beneficiary’s (the person you want the money to go to) finances will be covered.
Life insurance plans also offer longer terms, like 10 or 20 years. These policies also come with other advantages like maturity benefits and loyalty additions. In case you outlive the policy term, the money you invested can also come back to you tax-free upon maturity by paying a little extra premium.
Unlike health insurance, you do not have to pay in a lump sum for life cover. You can do so, or you can opt to pay in smaller amounts periodically. The younger you are, the cheaper your premiums. With age, not only do premiums become more expensive, but sometimes you can be disqualified altogether.
We hope this Life Insurance vs Health Insurance breakdown has been useful for you. If you don’t have an insurance policy in your name, there’s no better time than now to start investing. There are so many options to choose from, it can be a daunting task. It is always wise to consult an insurance agent who could help you in understanding life insurance vs health insurance before making your decision. That way, you know exactly what to look for.
We, at Onsurity, are driven towards ensuring our customers have the best of health at all times. With our comprehensive healthcare packages, we are taking digital healthcare to a new level, allowing customers to take care of their medical needs, at all times.