In today’s world, there are many uncertainties in the life of an individual, & to deal with them, one has to ensure an adequate financial planning model. By conducting proper financial planning, the desired lifestyle can be maintained & funds can be managed for future obligations. Also, buying financial products helps to handle these uncertainties by assisting with financial support. There are two most suitable financial products available, namely, Health Insurance & Life insurance plans. Let us discuss them in detail.
A Health insurance Policy is basically a contract between the insurer & the policyholder, where the health insurance company offers complete coverage to the insured maximum up to the limit of the sum assured. It also offers medical coverage for medical expenses that are incurred during an emergency or planned hospitalisation. The insurance provider reimburses the costs & expenses incurred due to illness or injury, etc. A Health Insurance Plan includes the surgical & medical expenses of an insured, which are paid to the insurer afterwards.
Life insurance is a contract entered between a policyholder & an insurance provider company, where the insurer promises to pay the money in exchange for a certain premium in the event of the demise of the insured. It is important to select the best insurance policy based on the requirements, affordability, & convenience.
Also Read: Planning Long-term Financial Goals With Term Insurance
Difference between Health Insurance & Life Insurance Plans
| Basis of Difference | Health Insurance | Life Insurance |
| Coverage | It includes hospital, surgical, & medical expenses. | It provides lifetime coverage & maturity benefits to the beneficiaries in case of the sudden demise of the policyholder. |
| Scope | They include medical expenses only but do not include savings, investments & life coverage. | It is wider as it includes investments, savings, life coverage & medical benefits. |
| Policy Tenure | They are meant for the short term. | They are meant for a longer tenure. |
| No Claim Bonus | Some policies will provide the option of “No Claim Bonus”. | There is no facility for a “No Claim Bonus”. |
| Return on Investments | There is no return on investments. | Some life insurance plans offer a return on investments. |
| Survival benefits | No survival benefits in the case of a health insurance plan. | Some of the life insurance policies, such as saving insurance plans, offer survival benefits. |
| Tax benefits | Get a tax deduction against the amount invested in a health insurance plan under section 80C. | Get a tax deduction under section 80C & an exemption of tax under section 10(10D) of the Income Tax Act, 1961. |
| Rider Options | They offer additional riders to increase the policy coverage. | They offer rider options to increase the financial benefits. |
Different Types of Health Insurance Plans
Provided below are the different types of health insurance plans:
Individual Health Insurance
Individuals can get expenses compensated for illness along with medical expenses, including hospitalisation, surgical, & pre- & post-medical expenses until the insured limit is exhausted. The insurance premium is dependent on multiple factors, such as the age of the buyer, medical history, etc. An individual can also cover spouse, children, & parents by paying an extra premium under the same plan.
Senior Citizen Health Insurance
It covers the cost of hospitalisation & medicines, as well as some other benefits like Domiciliary Hospitalization & Psychiatric benefits. It provides coverage to those 65 years & above. Also, the premium is comparatively higher as senior citizens are more prone to diseases.
Critical Illness Insurance
It provides insurance by offering a lump sum amount of money for life-threatening diseases. When the insurance is bought, one has to choose the health-related problems, & if the insurer is further affected by any of the same, the insurance can be claimed.
To claim this kind of insurance, you do not need to be hospitalised; only a diagnosis will allow you to get the benefits of this Critical Illness insurance. The amount that is to be paid against the premium is pre-decided, irrespective of the pre & post-hospitalization expenses.
Different Types of Life Insurance Plans
Provided below are the different types of Life Insurance Plans:
Term Life Insurance
In this plan, beneficiaries of the term life insurance policy get death benefits in case the insured passes away during the tenure of the policy. It covers a huge amount with nominal premium rates, making it cheaper than other policies. In this policy, there are no maturity benefits due to them being a complete protection plan & not a savings one.
Whole Life Insurance
In this plan, the policyholder gets covered until his/ her death. In the case of a participating policy, the premiums are higher, & dividends are paid out at regular intervals to the policyholders. On the other hand &, in the case of a non-participating policy, the premium rates are lower, & the policyholder cannot avail of the dividend benefits.
Unit Linked Insurance Plan (ULIP)
This plan is the most popular one as it involves dual benefits, i.e. investment & life insurance. Part of the premium paid is bifurcated towards insurance coverage, & the rest is directed towards a bunch of investment instruments, including debts, equity, & other securities.
Endowment Plan
This policy covers both insurance & saving factors, aiming to provide maturity benefits to the insured. It provides benefits in the form of a lump sum payment at the end of policy tenure, even in case the claim is not made. They can further be classified into profit & without profit depending on policyholders’ appetite for risk.
Conclusion
If we talk about an all-rounder financial plan, one should plan to buy both health & life insurance plans. A health insurance plan takes care of medical costs, surgery costs & hospitalisation expenses. On the contrary, a life insurance plan offers financial security to the family members in case of the sudden demise of the policyholder.
Also Read: How Do You Select The Best Life Insurance Plans? A Guide To Help You Out
