Difference Between Term Insurance and Health Insurance

A life insurance term plan is an agreement between you and your insurer, wherein your insurer will provide a death benefit to your family members in case of your unexpected demise during the policy term. 

We have customised our TATA AIA term insurance plans to satisfy individual needs better. The death benefit can be received as a lump sum or regular income for a defined income period. You can also opt to receive the premiums paid towards the policy as a refund when the policy matures.

There is also the option to add-on rider options that pay the insured sum during specific scenarios in your life, such as getting affected due to a critical illness, terminal illness or a disability.

A health insurance plan is a product that provides financial assistance to pay for your hospitalisation and medical expenses during an emergency or even otherwise. In addition, it can ensure cashless treatments in the network of hospitals tied up by your insurer.

The plan can cover pre-hospitalisation, and post-hospitalisation costs up to the sum insured. You can purchase individual health insurance or family health insurance to include all your family members.

Types of health insurance policies

• Individual health insurance
  It covers a single individual against medical emergency expenses. A major advantage of individual health insurance is that it can be customised according to your specific needs. An age, gender, habit, special medical history, or specific heredity-related issue could determine the specific requirement. Furthermore, such plans are suitable for young people without families.

• Family health insurance
  Plans like these are called family floaters. Under one policy, the whole family is covered. Health insurance premiums for families are way more affordable than individual plans when you calculate it per member. When you have family health insurance, you don't have to manage multiple policies and payments for everyone.

• Unit Linked Health Plan
  This plan aims to serve both investment and health insurance purposes. A portion of your premium payment is invested in units of your choice. Depending on the portfolio offered by the insurance company, it could be stocks, bonds, or government securities. The remaining portion of your premium goes toward insurance. In accordance with the policy terms and network hospital coverage, you may receive cashless treatment or medical expense reimbursement. This plan allows you to manage your investments and health insurance under one plan.

• Senior citizen health plan
  Due to their age, senior citizens are more prone to diseases that require hospitalisation. The majority of companies do not offer health insurance plans to senior citizens without a medical checkup. Preexisting diseases are also not covered. The cost of senior citizen health insurance is also higher, due to the increased risk of claims. Your family's senior citizens should be covered by health insurance if they are not already. The market offers some plans tailored to the needs of elderly people over 60.

Types of term insurance policies

• Standard term insurance plan
  The premium amount remains the same throughout the term of the plan. In addition, the sum insured remains the same. In the event of a death of the policy holder, the nominee receives the amount equivalent to the sum insured.

• Return of premium term insurance
  The standard term insurance plan does not provide any benefits if the policyholder survives the entire term. In contrast, if you choose the "Return of Premium" term insurance plan, the amount will be refunded at the end of the policy term. If the nominee passes away during the term, he or she will receive the amount specified in the policy. This plan has a slightly higher premium than regular term insurance.

• Increasing term insurance
  As time passes, the value of money decreases due to inflation. After 20 or 30 years, the value of a Rs. 6 lacs insurance policy may be negligible. Your nominees should receive a meaningful amount in the event of your unfortunate death by revising your term insurance over time. With increasing term insurance, you will pay a little higher premium every year and your sum assured will also rise accordingly.

• Decreasing term insurance
  Insurers assume more and more risks with each passing year. However, the insured has a limited budget. In this case, the insurance company provides term insurance at the same premium each year, but with a reduced sum assured. Such a plan is only suitable if you are limited by your budget. Over time, inflation reduces the value of the sum insured.

• Convertible term insurance plan
  This is similar to a standard insurance plan, but with the option of converting it into an endowment plan. The insured must pay a little more premium for the same. Standard term insurance plans remain valid if the insured does not wish to pay additional premiums.

• Term insurance with riders and options
  Depending on your individual needs and risk perception, you can add additional riders and options to your standard term insurance policy. When choosing a term insurance plan, take the time to consider the right riders and options for you.