Term insurance vs health insurance -Types, benefits & common differences


5 min read

Insurance provides a protective umbrella to anyone who wishes to seek shelter and security against the uncertainties of life. Whether it is life insurance or health insurance, motor insurance or property insurance, each of them has your back when it comes to risks and unpredictable hazards in life. When life itself is unpredictable, it sure helps to have it covered. What remains to be decided though is which insurance policy can provide the maximum coverage and offers the greatest benefit. One confusion that most people often have is, choosing between health insurance and term insurance. This is because both these policies cover serious risks concerning the health of an individual. Yet, one stays unsure whether to buy both or just one of them.

Here we discuss both these policies in detail, highlighting the different types of both, the benefits each offers and the differences between the two.

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What is a Health Insurance Policy?

Before we go on to understanding each policy in detail, let’s first learn what each of them mean. Health insurance, also known as medical insurance or mediclaim, is designed to provide adequate reimbursement for any expenditure on medical treatments for certain health conditions. Of course there are cashless plans too in health insurance, wherein your medical expenses are directly paid by the insurer. Getting health insurance for yourself and your loved ones means that you don’t need to worry about covering the huge cost of the treatment all at once right at that moment. Your mediclaim plan has you covered if you pay the premium regularly.

What is a Term Insurance Policy?

Term insurance plans come into use after an unexpected untimely death of the person in whose name the policy was taken. This means that the benefits of the insurance policy can be availed not by the policy-holder themselves but by their family members. The nominee would receive financial assistance by way of the policy, provided the policy-holder dies within the tenure of the said policy. By getting term insurance, you can be sure of securing the future of your loved ones even when you’re not there.

Various Types of Medical Insurance and Term Insurance Plans in India

Both health and term insurance plans come in different types to suit individual needs.

Different Types of Medical Insurance Plans in India

ere are the various types of mediclaim plans:

  • The Individual Health Insurance Policy covering only 1 individual; policy benefits can only be availed by the policy-holder.
  • The Family Floater Health Insurance Policy allows the individual policy-holder to extend the policy benefits to their near and dear ones – parents, spouse or kids.
  • The Group Health Insurance Policy covering the employees of a company
  • The Senior Citizen Health Insurance Policy covering people over 60 years old
  • The Critical Illness Insurance Policy providing coverage for heavy expenditure on serious health conditions that may pose a threat to life, such as cancer, heart disease, etc.
  • Top-up Health Insurance Policies that continue to provide coverage benefits when the threshold limit of your base health insurance plan expires. They can be purchased at the time of buying a mediclaim policy, for later use.

Different Types of Term Life Insurance Policies in India

Just like health insurance, term insurance plans are also of different types to cater to specific individual requirements –

  1. Increasing Term Insurance Plan – This plan allows the insured sum to increase annually; premium stays the same though.
  2. Decreasing Term Insurance Plan – Under this plan, a certain percentage of the insured amount keeps decreasing every year; it helps to take this plan if you have a loan or mortgage to pay up.
  3. Level Term Insurance Plan – As the name suggests, the insured sum stays leveled or just the same during the entire duration of the policy.
  4. Term Insurance Plan with Riders – Riders here refers to the extra benefits offered under the plan such as premium waiver and critical illness rider. These benefits are aimed at providing extra coverage over the basic term plan.
  5. Term Insurance with Return of Premium – Referred to as TROP, this term insurance plan allows for premium return in case the policy holder survives beyond the expiry of the term plan. It is refunded at term-end.
  6. Convertible Term Insurance Plans – These policies can be converted either into whole life insurance or endowment plans.

Advantages, Benefits of Medical Health Insurance and Term Insurance Plans in India

Each of the policies have their own advantages. that are listed below.

Advantages and Benefits of Medical Health Insurance Plans in India

A health insurance plan provides coverage for most medical expenses which include the following:

  • Expenditure involved in treatment of the patient before and after their stay at the hospital. Coverage is offered only up to the total sum insured.
  • It also covers cost involved in care for the patient at home
  • Maternity expenses, including delivery (both normal and C-section) and newborn care expenditure are also covered under mediclaim
  • Treatment expenditure for serious diseases and health conditions like kidney failure or heart disease can be covered under plans bought as add-ons or standalone policies.
  • Also covers the cost of diagnostic tests, scans and x-rays, ICU, OT expenses, etc.

Advantages and Benefits of Term Insurance Plans in India

Term insurance plans have their own advantages such as:

  • Income tax exemptions
  • Return of Premium (RoP) facility
  • Coverage on death by accident
  • Rider benefits to add extra coverage over the basic term plan
  • High assured amount at reasonable premiums

Term Insurance vs Health Insurance: Know the Major Differences

To better understand the exact difference between term insurance and health insurance, here’s a table that explains how the two policy plans differ from each other:

Term Insurance  Health Insurance
Offers financial support to family of insured after the latter’s death Supports the insured and their family to bear unexpected medical costs during their lifetime
Nominal fee charged as premium Relatively higher premium paid than term plans
Does not provide policy maturity benefits Provides for no-claim maturity bonus
Single-time fixed sum assured to nominee Financial support whenever needed, with no specific time limit
Annual premiums to be paid Premiums can be paid monthly, quarterly, half-yearly or yearly

 While both medical and term insurance have their individual characteristics, both are equally important to secure your future and that of your loved ones, both in this lifetime and after.

Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.


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Jul 06, 2022
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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