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🏥 Term Insurance vs Health Insurance: What’s the Difference and Which One Do You Need?
In today’s uncertain world, having insurance is essential — but many people confuse term insurance with health insurance. While both protect you financially, they serve completely different purposes.
In this blog, let’s break down the differences, uses, and benefits of each so you can decide which one (or both!) is right for you.
🧾 What is Term Insurance?
Term insurance is a life insurance policy that provides a financial payout to your nominee if you pass away during the policy term.
âś… Key Features:
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Covers death risk only
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No maturity benefit (unless it’s a return-of-premium plan)
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Affordable premium for high coverage
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Tenure options: 10–40 years
đź“Ś Example:
If you buy a â‚ą1 crore term plan for 30 years and die during that time, your family gets â‚ą1 crore as a lump sum.
🏥 What is Health Insurance?
Health insurance covers medical expenses if you are hospitalized or undergo treatment due to illness or accident.
âś… Key Features:
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Pays for hospitalization, surgeries, daycare treatments
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Cashless or reimbursement facility
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Annual renewals required
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Tax benefits under Section 80D
đź“Ś Example:
You get hospitalized with a ₹2 lakh bill — your health insurer pays the amount as per policy terms.
🔍 Key Differences at a Glance:
| Feature | Term Insurance | Health Insurance |
|---|---|---|
| Purpose | Financial support after death | Cover medical and hospital expenses |
| Benefit Type | Lump sum to nominee | Direct payment to hospital |
| Who Benefits | Family (after policyholder’s death) | Policyholder (during illness) |
| Coverage Duration | Long term (10–40 years) | Short term (1 year, renewable) |
| Tax Benefit Section | 80C | 80D |
| Maturity Benefit | No (unless return-of-premium) | No (unless wellness rewards etc.) |
| Premium Cost | Lower (for young age) | Varies based on age, coverage, etc. |
🤔 Do You Need Both?
Yes! Term and health insurance serve different needs, and having both is the best way to protect your family and yourself.
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✅ Term Insurance – Secures your family’s future if you’re not around.
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✅ Health Insurance – Covers your medical bills while you’re alive.
Together, they provide complete financial protection.
🧠Tips to Choose the Right Plan:
âś” For Term Insurance:
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Choose a sum assured 10–15 times your annual income
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Select a policy term until your retirement age
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Go for online term plans for lower premiums
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Check claim settlement ratio of insurer
âś” For Health Insurance:
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Choose at least ₹5–10 lakh coverage (per person)
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Ensure cashless hospital network is large
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Check for pre- and post-hospitalization cover
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Consider critical illness or top-up plans too
đź’¬ Final Thought
“Term insurance protects your loved ones. Health insurance protects your wallet.”
They’re both essential — not alternatives. Don’t wait until it’s too late to buy either. Premiums are lowest when you’re young and healthy, so act early and secure your future wisely.