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Updated on Nov 18, 2022
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Your family is your world and the center of all that you hold dear. You want to make sure they are taken care of even if something happens to you or them. Term insurance and health insurance plans can be a great way to do this! Most people believe that term insurance is a panicked remedy for excessively emotional people. This is not true; if you can save the annual payment and have peace of mind knowing that your entire family will be cared for long after you are dead, why not? The same may be said about health insurance plans. In reality, these plans are more comparable than you would expect.
You can never predict when life will throw you a curveball. Life is unpredictable, which is why it’s important for everyone to have some type of protection plan in place. Term insurance plans and health insurance plans provide financial assistance during tough times. The former provides financial aid to your family in case of your unfortunate death while the latter provides coverage when you suffer from a serious illness.
Both insurance policies provide a surrender option, which is an agreement between the insurer and the policyholder to allow for early termination of the contract. The surrender money is paid after deducting a surrender load, which varies from one insurer to the next. However, the sum is generally less than the amount paid in premiums.
Term and Health Insurance Plans both allow customers to enhance the coverage of the basic plan by adding riders or add-ons to the plan. It’s a great way of increasing coverage of a standard plan by paying a little more premium amount.
Premiums paid for both term and health insurance plans qualify for an exemption of Income Tax but under different sections. Section 80C provides tax exemptions on term life insurance premiums provided the annual premium amount is less than 10% of the gross sum assured and upto a maximum amount of INR 1.5 lakhs a year. In term plans, the death benefit is also tax-free in the hands of the nominee.
Also Read: Pros and Cons of a Term Insurance Plan
Whereas, Section 80D provides tax exemption on premiums paid on health insurance plans upto INR 25,000 for premium paid towards self, spouse and dependent children. There is an additional benefit of INR 25,000 for health insurance premium paid for parents, which enhances to INR 50,000 if either of them are more than 60 years of age.
What is the best type of insurance? That’s a question that many people grapple with, but the answer is actually quite simple. Term and health insurance are both crucial types of coverage for your family, and it’s important to include them in your portfolio. If something unfortunate happens to you, term insurance will provide financial help to your designated beneficiaries. Health Insurance covers any medical expenses if you are hospitalized or in case of a serious illness – which can be anything from cancer treatments to emergency surgery.
Also Read: Mediclaim Vs Health Insurance
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