Life Insurance vs Health Insurance
You can set aside only a fixed amount of money to buy a safety net for yourself and your loved ones. Which one do you opt for in such a scenario, a full-fledged life insurance or a health insurance plan? It can be a tough call as both the situations need some thought process. Having a life insurance gives you the confidence that your family members will not be strained as far as finances go if unfortunately, something happens to you. On the other hand, any illness or hospitalizations can also set you back substantially when it comes to your financial planning. So, with your limited resources, which ones should you opt, a life insurance or a health insurance?
Need for it
A life insurance can safeguard the financial interest of your family in the event of an untimely death. Even if you are not around, the insurance will provide them with enough resources to continue with their lives. In fact, if you plan the insurance well, the sum assured can help them not only proceed with their lives but also achieve important milestones.
A health insurance, on the other hand, would take care of all your medical and hospitalization expenses. An insurance from a reputed or well-established insurer would give you access to a network of hospitals where you can use cashless benefits; thereby, keeping your financial planning intact.
Life insurance has a few sub categories and no matter which one you pick, the nominees will receive a certain sum assured in the event of the death of the insured. One of the simplest life insurance policies is the Term Plan. It is incredibly affordable and provides you with a substantially large death benefit if anything happens to you within a certain time frame. Most other life insurances provide you with death benefits as well as other financial gains but at a marginally higher cost.
A health insurance would cover all the medical treatment and hospitalization costs of the insured or their dependents. Depending on which type of plan you opt for, your policy might cover many critical illness or medical conditions and pay for the same. A health insurance plan mostly has an upper ceiling or amount of coverage and certain terms and conditions. If you adhere to those, you need to worry about the costs of a medical procedure or hospitalization.
Can they do more?
As mentioned, depending on the type of life insurance you choose, the benefits will differ. The death benefit is something common to all life insurances. On the top of that, you can expect maturity benefits, loyalty bonuses on completion of a certain number of years with the policy, surrender benefit if you do not want to continue with the plan etc.
If you have a health insurance plan and have not claimed the same, you stand to benefit from no claims bonus. It is a form of discount, that you can carry forward for a certain number of years or discount percentage. Also, some of the insurers provide free medical check-ups after a certain interval.
You can claim the amount you have paid as insurance premiums for tax rebates with both life as well as health insurance. You can avail these tax benefits under Section 80C and Section 10D(D) for life insurance and Section 80D for health insurance. You can opt for a health insurance or life insurance for either individuals or for a group (family). A life insurance usually has categories such as retirement type, wealth creation type, savings type or plain term type. Whereas, a health insurance is usually of comprehensive type or cover for critical illness.
Which Should you buy?
A life insurance and a health insurance cater to two completely different needs and should not be confused at any costs. If you are not restricted by finances, you should go ahead and add both to your portfolio. But if you have limited number of resources, it is advisable to get a life insurance with a decent enough coverage and a health insurance with slightly compromised coverage. You can, of course, increase these limits with time, but you should not leave yourself vulnerable by not picking either or both insurance types.