Do I Need a Term Plan in India if I Have a Health Insurance?

Do I Need a Term Plan in India if I Have a Health Insurance?

How can one compare a refrigerator to an oven? A refrigerator is meant to keep food cold and preserved, while an oven does the exact opposite of keeping it hot! While both appliances deal with food, their purpose and functionality are poles apart. This is how comparing a term insurance plan with health insurance would look. Ultimately, they both are insurance plans but serve different purposes and offer different benefits. While term insurance protects your family's financial security when something unfortunate happens to you, health insurance assures monetary compensation for your medical bills. They are varied in scope, purpose, premium payments, etc. Let’s find out if you need to buy term insurance if you already have health insurance. Let’s begin by understanding the basics of each plan in detail.

What is Health Insurance?

A health insurance policy covers expenses incurred for medical treatments, hospitalizations, surgeries, etc. It aims to secure your finances against unforeseen medical expenses.

Why do you need health insurance?

There are essentially two main reasons for investing in a health insurance policy -

• With the onslaught of modern lifestyles (smoking, drinking, increased gadget usage, etc.) and pollution, come rising medical conditions. According to this report, around 5.8 million Indians die from cancer, diabetes, heart, and lung disease each year. Illnesses can strike at any time - completely unannounced.
• The rise in medical innovation and technologies as well as a shortage of staff and increase in raw material costs has caused a significant uptick in medical inflation. The costs of medical treatments and medicines are rising by the day. This report states that India’s medical inflation stands at 14% ^# (provide source)- the highest among Asian countries.

So, what can you do if an unforeseen medical expense comes knocking at your door? How do you ensure that your savings are depleted because of a sudden hospitalisation or treatment?

A health insurance policy will help you tackle such scenarios with ease. It offers you financial coverage to cover all planned and unplanned medical expenses that you might incur in the future. Moving on to term insurance.

What is Term Insurance?

Term insurance is a policy that guarantees^# a fixed sum to your family members if you pass away during the policy term. The policy will provide your family with a death benefit to ensure financial stability without compromising on their lifestyle.

Why do you Need Term Insurance?

Say you are the breadwinner of your family. What will happen to your family if you are not around to provide for them anymore? Their financial stability will be at stake. But, when you buy yourself a term insurance policy with adequate coverage, you ensure that your family will be taken care of in such unfortunate circumstances.

The claim amount that is received as a death benefit can be used for managing the financial needs that are both short and long-term. It can be used to pay off outstanding loans, paying EMIs, utility bills, rent, etc.

Let us now compare health insurance and term insurance plans.

Difference between Term and Health insurance plans

Do you need a Term Plan in India if you have Health Insurance?

Having a health insurance plan does not mean that you don’t need a term plan. A health insurance plan and a term insurance plan are varied in scope, coverage, and features. There are several benefits offered by term insurance plans that are simply not available with a health insurance plan. So, essentially, comparing term insurance and health insurance is equal to comparing an apple and an orange - both serve different purposes. A term plan will help your family fund their short and long-term goals in your absence. On the other hand, a health insurance plan will help you curb out-of-pocket medical expenses and thereby, prevent you from dipping into your savings. You may need term insurance if you already have health insurance, especially if you have financial dependents or loans/liabilities that need to be paid. If you, unfortunately, pass away the financial burden of everyday expenses, long-term goals, and repaying these debts will befall the shoulders of your loved ones. The claim amount they will receive from a term insurance plan will act as a financial cushion to keep their futures secure - so they can achieve their milestones and continue their lifestyles - even in your absence.

To Conclude,

Life is full of unpredictable tomorrows; the best thing you can do today is secure your financial future! This is why you should be safer than sorry by investing in both term and health insurance policies. We hope this article helped you understand the need for both types of insurance.