Difference Between Health Insurance And Term Insurance

Difference between health insurance and term insurance

Knowing the difference between health insurance and term insurance is important before buying one of them. Especially, if it is your first time buying insurance and don’t know much about them. Both insurance plans provide different criteria. You must keenly examine both insurance plans and then compare them with your goal.

Both insurance plans ensure you financial support during uncertain times but for different situations. After reading this article, you will understand the concept and difference between health insurance and term insurance plans.

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Difference between health insurance and term insurance

What is health insurance?

Health insurance is a policy where you pay premiums to the insurance company against any medical expense in the future. Because of this plan, the insured person does not need to worry about arranging the funds for a medical emergency. The insurance company will cover the hospitalization and medical bills of the insured person.

Health insurance is a must to overcome financial issues while encountering a sudden health problem. But there are different medical policies available in India that you should consider before buying one.

  • Individual health insurance – under this plan, the company covers the medical expenses of the person insured. The policyholder is the sole person to incur the benefits of this plan.
  • Family floater health insurance – In this plan, the insured person can include their family members in the policy. The insurance covers the whole family.
  • Senior citizen health insurance – This plan is ideal for people above 60 years old. But this Mediclaim policy does not cover pre-existing diseases.
  • Group health insurance – Group health insurance is offered by an organization or an employer to their employees.
  • Critical illness insurance – This policy is made to cover the cost of life-threatening diseases like cardiovascular diseases, kidney failure, cancer, etc.
  • Unit-linked health plan – This plan serves as a dual option because you can divide your premiums in policy and investment. The company offers a portfolio from which you can invest in stocks, bonds, or government securities.
  • Top-Up health insurance plans – This plan is an addition to your existing health policy. Top-Up health insurance plan comes into action when basic health insurance expires.

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Difference between health insurance and term insurance, Health insurance Vs Term Insurance

What is term insurance?

Term insurance is the policy for a fixed period wherein upon the sudden demise of the insured person – during the policy tenure – the company pays the assured sum to the nominee. This plan gives financial security to the policyholder’s family in the absence of him/her.

Term insurance has several policies under its wing. There are many plans and events in life such as children’s higher education, their marriage, etc. You must consider your needs before choosing term insurance.

  • Level-term insurance plan – On buying this plan, the sum assured to give remains the same throughout the policy tenure and does not change.
  • Term insurance with Return of Premium (TROP) – If you outlive the policy period, then the premium will be returned once the plan expires.
  • Premium refund plan – If you are healthy after the policy term is over, then the premium is refunded and is tax-free.
  • Term plans with riders – Riders like accidental death cover, critical illness cover, etc are added to the insurance plan to strengthen the basic policy.
  • Convertible term plans – This plan can be changed into other plans such as an endowment plan or whole life insurance with some extra premiums.
  • Increasing term plan – After going with this plan, you can increase the assured amount every year by paying a little higher premium.
  • Decreasing term plan – The premiums remain the same but the assured sum is deducted with a certain percentage.

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Difference between health insurance and term insurance

Understanding the difference between health insurance and term insurance will give you a clear picture because both plans serve different purposes, premiums, and scopes. The table shown below will tell the differences between both insurance plans on various parameters.

Parameters Health Insurance Term Insurance
Policy Coverage All the medical expenses of the insured person are incurred by the insurance company. Financial support is provided to the family of the insured person upon their death in between the policy period.
Assured Sum Benefit The amount is given to the insured person to pay for the hospitalization and medical bills. The amount is given to the nominee after the demise of the policyholder.
Rates of Premiums In health insurance, the premiums rates are high. In the term insurance plan, the premium rates are affordable.
Returns There are no returns on health insurance. The basic term insurance does not provide any returns. But if opted for the return of premium option then the premiums are paid as survival benefits.
Additional Riders You can add-on benefits to the policy like accidental deaths and permanent disability. In the term insurance policy, additional riders like income return benefits, critical illness cover, accidental death cover, etc can be added.
Premiums frequency The premiums in health insurance are payable annually. The premiums in term insurance are ideally paid monthly. But there are options for quarterly, half-yearly and yearly pay-outs too.


Now that you have read this, all the questions must have found their answers. There is a difference between health insurance and term insurance but both insurances are important. Everybody should buy both insurance policies. Health insurance is a helping hand at the time of any medical emergency whereas term insurances give financial stability to your family in your absence. Don’t think further and buy the insurance now.

Team R Wealth

Team R Wealth

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