- High coverage at a low premium
- Financial protection for your family’s future
- Tax benefits up to Rs. 46,000`` under Section 80C and 10(10D)
- Dedicated claim assistance
- Customisable plans to suit your needs
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In summary
Key points to know:
- Term insurance focuses on your family's long-term financial security.
- Health insurance helps manage rising healthcare expenses.
- Term plans generally offer higher coverage at lower premiums.
- Health insurance can reduce out-of-pocket medical costs.
- Term insurance offer tax benefits for premiums paid under Section 123 of the new Income Tax Act 2025 (effective from April 01, 2026) / earlier under Section 80C of the Income Tax Act 1961 (valid up to March 31, 2026), and death cover under Section 10(10D).
- Health insurance premiums may qualify for deductions under Section 80D.
- Some modern life insurance plans include health-related benefits through riders.
Understanding both products can help you build a more complete financial protection strategy. Compare coverage options, assess your needs, and explore plans that align with your family's future goals.
What is a term insurance plan?
Importance of term insurance
A term insurance plan is a life insurance policy designed to financially protect your loved ones if something happens to you during the policy term.
If the insured person passes away while the policy is active, the nominee receives the agreed sum assured as a lump-sum benefit. This amount can help the family manage daily expenses, repay loans, fund children's education, and maintain their lifestyle.
Since most term plans focus primarily on protection and do not provide maturity benefits, they are generally more affordable than many other life insurance products.
What is a health insurance plan?
A health insurance plan helps cover medical expenses arising from illnesses, accidents, surgeries, or hospitalisation.
Depending on the policy, it may cover hospital bills, doctor consultations, diagnostic tests, medicines, and other eligible healthcare expenses. Some plans also offer cashless treatment at network hospitals and preventive healthcare benefits.
With healthcare costs continuing to rise, health insurance can help protect your savings during medical emergencies.
Difference between health insurance and term insurance
Understanding the core differences between term insurance and health insurance empowers you to make informed decisions that truly protect your family’s needs.
| Aspect | Term insurance | Health insurance |
| Purpose | Financially protects your loved ones by paying a lump sum to your nominees in case of your death. | Covers medical and hospitalisation costs, ensuring you get quality treatment without financial stress. |
| Coverage type | Life cover with a lump-sum payout to secure your family’s future. | Health cover that reimburses or settles medical bills for illnesses, surgeries, and treatments. |
| Payout type | Lump-sum death cover to your family. | Reimbursement or cashless settlement of hospital bills. |
| Policy benefits | Ensures family’s financial needs, education, debts, and lifestyle continuity are met. | Minimises out-of-pocket costs during hospital stays and treatments. |
| Tenure | Long-term cover—up to 30-40 years—aligned with life milestones. | Usually annual or multi-year renewable cover. |
| Premium cost | Affordable premiums for large cover amounts. | Varies with age, health, and sum insured; higher for comprehensive plans. |
Quick tip: Some life insurance plans also cover health needs!
Traditionally, life insurance and health insurance were separate. But many modern life insurance plans now include health-related benefits—like critical illness riders or comprehensive combination plans. These allow you to:
- Get a lump-sum payout on death, ensuring financial stability for your family.
- Access funds for medical treatments in case you’re diagnosed with a serious illness (like cancer or heart disease), through a critical illness rider or built-in cover.
This means you can enjoy the best of both worlds: long-term financial security and protection against rising healthcare costs.
Compare both policies to build a robust financial shield. You can use online premium calculator or exclusive life insurance premium calculator to find the most suitable plan for your family’s future.
Benefits of term insurance vs health insurance
Choosing between term insurance and health insurance? Here’s how each empowers you with unique benefits tailored to your needs.
1. Financial protection vs medical expenses:
- Term insurance offers a lump sum payout to your family, ensuring their financial stability if you are not around.
- Health insurance covers hospitalisation, surgeries, and treatments, helping you manage rising medical costs without stress.
2. Nature of coverage
- Term insurance: Death cover ensures your family’s dreams continue, even in your absence.
- Health insurance: Pays for medical treatments, diagnostics, and post-treatment recovery.
3. Premium affordability:
- Term insurance: Enjoy high coverage with lower premiums. Get an instant premium quote now!
- Health insurance: Premiums vary, generally higher for broader medical cover.
4. Tax benefits:
- Term insurance: Save taxes under Section 80C / Section 123 (new act effective from April 01, 2026) and Section 10(10D).
- Health insurance: Deductions under Section 80D for premiums, including family and parents’ coverage.
5. Long-term vs immediate needs:
- Term insurance: Ensures your family’s financial security in the long run.
- Health insurance: Covers immediate healthcare needs.
Key features of term insurance and health insurance
Here’s a handy side-by-side look at how term insurance and health insurance align with your needs:
| Feature | Term Insurance | Health Insurance |
| Primary purpose | Financial support for dependents after death. | Pays for medical expenses—hospitalisation, treatments, etc. |
| Coverage type | Lump-sum death cover. | Medical expense coverage. |
| Benefit type | One-time payout to family. | Cashless or reimbursed medical bills. |
| Policy duration | Long-term (10-30 years). | Renewable annually. |
| Premiums | Affordable with fixed terms. | Varies based on age, health, and coverage. |
| Tax benefits | Section 80C /Section 123 deductions. | Section 80D deductions |
Note: Tax benefits are subject to prevailing tax laws. Tax laws are subject to change. BFL does not provide tax or investment advisory services. Please consult your advisors.
What tax benefits are available under term and health insurance?
Term insurance (with or without health rider tax benefits):
- Section 80C of the Income Tax Act 1961 (valid up to March 31, 2026) / Section 123 of the Income Tax Act 2025 (effective from April 01, 2026): Get up to Rs. 1.5 lakh deduction annually on premiums paid.
- Section 10(10D): Death covers are fully tax-exempt.
- Critical illness rider: Premiums may be split between Sections 80C/Section 123 and 80D depending on policy structure.
Health insurance tax benefits:
- Section 80D: Deduct up to Rs. 25,000 for individual plans and up to Rs. 50,000 for senior citizens.
- Family floater bonus: Combine premiums for self and parents for deductions up to Rs. 75,000 or Rs. 1 lakh.
How does the claim process work for term and health insurance?
Term insurance claim process:
- Notify the insurer quickly after the policyholder’s death.
- Submit documents: death certificate, policy papers, identity proof.
- Insurer validates and disburses the payout.
Health insurance claim process:
- Cashless: Use your policy card at network hospitals.
- Reimbursement: Submit invoices and medical reports after paying bills.
- Quick claim settlement ensures stress-free healthcare.
What should you consider when choosing between term and health insurance?
- Purpose of coverage: Term insurance = life protection; health insurance = medical cost coverage.
- Life stage and dependents: Secure dependents with term insurance; protect health at all ages.
- Financial stability: Term insurance = future security; health insurance = savings from high medical bills.
- Tax benefits: Leverage Section 80C and 80D.
- Budget: Term insurance is affordable; health insurance varies.
Life insurance isn’t just a policy—it’s a promise that your family’s needs and dreams stay on track, even if life takes an unexpected turn. Ensure their education, lifestyle, and future are safeguarded. Life insurance is more than a benefit—it’s peace of mind. Build your perfect coverage—compare plans now and get quote!
Conclusion
Choosing between term insurance and health insurance isn’t about picking one over the other—it’s about ensuring comprehensive protection for your loved ones. Term insurance safeguards their financial future, while health insurance covers medical expenses during life. Together, they build a robust safety net that aligns with your goals and budget.
Ready to protect what matters most? Compare plans and get instant quotes—start your journey to financial security now.
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Frequently asked questions
Term insurance vs. health insurance
What is the main difference between term insurance and health insurance coverage?
Term insurance provides financial security to beneficiaries after the policyholder’s death, while health insurance covers medical expenses during the policyholder’s lifetime, including hospitalization, surgeries, and treatments.
What factors should I consider when choosing between term insurance and health insurance?
Consider coverage purpose, dependents, life stage, financial stability, tax benefits, and premiums to decide which aligns best with your financial goals and security needs for both life and health.
Should I have both health and life insurance?
Yes, both are essential. Life insurance provides financial security to your family after your demise, while health insurance covers medical expenses, ensuring protection against healthcare costs during your lifetime.
Can I purchase multiple health insurance policies?
Yes, you can buy multiple health insurance policies. During a claim, you can choose which insurer to settle the expenses first and use the other policy for additional coverage.
What’s the ideal coverage amount for term and health insurance?
For term insurance, aim for 15–20 times your annual income. For health insurance, a minimum of Rs. 10–Rs. 25 lakhs is ideal, depending on your age, family size, and medical inflation.
Is it possible to switch my term or health insurance plan later?
Yes, you can switch health insurance through portability and term insurance by buying a new policy. However, it may involve fresh underwriting, waiting periods, and policy comparisons before making the switch.
Does term insurance also pay for hospital or medical expenses?
No, term insurance does not cover hospital bills or treatment costs. It only provides a death benefit. For medical expenses, you’ll need a separate health insurance plan designed to handle such costs.
