Personal Insurance is acknowledged and understood by everyone – as a critical necessity in life. But within Personal Insurance – there are subtypes of Insurance and two most essential are Life Insurance and Health Insurance. Some people use them interchangeably and think they refer to the same but that is a wrong assumption and they are two distinct Products.
Health Insurance is Insurance taken against the possibility of falling sick in the future and sustaining large expenses towards hospitalisation and other healthcare services. It is a pre-emptive measure that one takes – that has a two-fold benefit. One benefit is that you know you will be able to afford good medical treatment for yourself in the event of sickness. With the rising medical costs – that is a big factor.
The second benefit is that – if you do fall sick, at least the expenses on medical treatment will not bankrupt your family or face them under financial duress for a long time. These are both solid reasons to invest a good Health insurance Plan. Reputed insurance companies – can also provide other benefits of taking a health insurance plan – such as Network Hospitals, free check-ups, Cashless hospitalisation, etc.
Health Insurance Plans are generally given for short periods of time between one and three years and do not yield any maturity benefits – but they may have No Claim Bonus policy to reduce your premium expenditure. A Tax Benefit that can be claimed on the premiums invested in the Health Insurance Plan is under Section 80D of the Income Tax Act, 1961 – where premiums paid for self, immediate family and dependent parents – can be deducted from taxable income. Health Insurance Plans can be purchased as an individual, as a family floater policy or as a group policy.
Life Insurance policies are taken as a measure of securing your loved ones in the event of your demise. There is a promised lump sum that is paid to the nominees mentioned in your Life Insurance policy in the ratio mentioned. This money generally smoothens a lot of worries for the family members left behind – and can be used for settling the debts if any of the deceased, used for funeral expenses, education costs of children or medical costs of parents left behind. It gives the insured's family financial support – till they can get back on their feet.
Life Insurance is taken for longer periods of time – extending over 10 years at a time. In case you do not need to claim the Term Insurance and it matures – in "Return of Premium" policies – the premium paid is returned with some additions towards interest and deductions towards expenses. Life Insurance is available as an individual or group plan.
A Tax Benefit that can be gained is by claiming the premium paid as a deduction under Section 80C of the Income Tax Act, 1961 and even the maturity claim is tax-free under section 10(10(D)) of the Act.
This is not a fair question – truth be told – they are both extremely important for doing decent financial and life planning. Life Insurance Premiums are lower than Health insurance Premiums. There are a large number of Insurance Companies which all have different plans that cater to many different categories and options.
Don't consider the payment of Premium on Personal Insurance as an expense – rather you can take as an investment towards leading a happy, well planned and stress-free life. By investing in these Insurance Schemes you are fulfilling your responsibilities towards your family as well as yourself. Many Insurance Companies provide both policies and offer attractive premium rates on purchase from the same. Do a little research and then invest in the plan that works best for you.