Working in a company? Reasons to Own Both Term and Health 

The rising cost of healthcare facilities and the Pandemic has made it necessary for everyone to have an emergency financial backup. While savings and investments are important, no one can ignore the value of term and health insurance in times of emergency. While the former gives financial help to the insured’s family in case of unfortunate demise, the latter is useful for covering the policyholder’s medical bills in the event of serious illnesses or injuries. Let’s describe both of them and see whether it makes sense to buy the combo where both term and health insurance are included.

What is term insurance?

Term life insurance is a type of life insurance policy in which the insurance provider or insurer offers coverage to the insured in the event of his or her death in exchange for a specified number of premiums paid towards the sum assured amount. These payments are only made throughout the policy’s duration, and if the policyholder dies during that time, the insured’s family receives the sum assured as a death benefit. However, if the insured outlives the tenure or dies after it, no sum assured will be given.

Recently, insurance firms started providing Return of Premium term policies, which provide a survival benefit to the policyholder. If the insured lives the insurance period, the firm will pay the full premium as a maturity benefit.

What is Health Insurance?

Health insurance supports the insured’s medical expenses and hospital bills. If the policyholder has to pay large medical bills as a result of an illness or injury, the health insurance company will settle these expenses with the hospital or medical care facility. The diseases and health conditions covered by a health insurance plan vary depending on the policy and the insurance company.

Importance of buying Term and Health Insurance in current times:

1. Helps you protect your income: You can ensure that your life, health, and finances are entirely secure by purchasing a term and health insurance policy that includes a life cover and a health cover.

2. Comes with affordable premiums: Term life insurance premiums are not only fixed as per the tenure, but they are also lower than those of other insurance plans. When selecting a health insurance plan, a healthy lifestyle and a lower age limit can help you get reasonable premiums.

3. Tax benefits for health and term insurance: The Indian Income Tax Act of 1961 allows premiums for both term and health insurance to be tax deductible. Term plan premiums are tax-deductible under Section 80C, whereas health insurance premiums are deductible under Section 80D. Similarly, the death benefit payout from term insurance is free from taxation under Section 10(10D).

4. No need to use up emergency reserves and savings: Your hard-earned money is always safe with term and health insurance, which provide comprehensive financial coverage for your life and health. Health insurance covers emergency medical bills. Furthermore, term plans provide your family with a solid financial future in the event that you die unexpectedly. As a result, you or your family will not be forced to tap into your savings in the event of an emergency.

5. Helps you be prepared for unanticipated events: A term insurance policy can provide strong support to your family in meeting their financial requirements when you are no longer here. A health insurance plan also provides coverage for important illnesses such as cancer, liver, cardiac, and neurological, as well as protection against accidental death. 

Does it make sense to choose the combo plan of Term and Health Insurance?

Life insurance gives financial help to your family in the event of your death, whereas health insurance covers hospitalisation and associated costs. Some insurers now provide policies that combine life and health insurance benefits for a more complete coverage option with the goal of providing consumers with a one-stop solution. Let’s look at key aspects to see if these policies outperform typical life and health insurance plans.

Sum Assured: The maximum value assured for these policies ranges from ₹10 to 50 lakh. When compared to standard term life insurance plans, the maximum sum assured may not be appropriate. However, the additional death and health benefits might enhance existing life and health insurance policies.

Wealth generation: Term life insurance does not provide wealth generation, whereas health insurance covers hospitalisation and other expenses. However, these plans include maturity benefits and income options. For example, some of the plans offer a fixed income option, in which the policyholder receives a monthly income for ten years. Whereas if you choose the increasing income option, your monthly income will increase over the course of ten years. The income amount usually increases gradually over time, allowing you to cope with future inflation and rising living costs.

Maturity benefits: If no claim is filed during the policy period, most health insurance policies do not refund the money. Premiums are used to cover the costs of claims filed by other policyholders. Some insurers give premium discounts if the coverage is claimed within a year. If you choose a return-on-premium plan for term life insurance, you can receive your premium back. However, if you do not make a claim under these policies, you can receive your premiums returned along with the benefits earned over the policy period. The selected option will determine the overall sum and advantages.

Premiums: It vary depending on age, gender, and lifestyle behaviours. However, because term life insurance only provides life insurance, it typically has the lowest premium. On the other hand, these plans include life and health insurance coverage. As a result, the premiums for these policies may be greater than for typical term life insurance plans.

Premium payment and tenure: With term insurance, you have the option of paying premiums until the end of your policy period, which is often when you reach the age of 60, or paying for a limited period and enjoying the benefits. However, these plans mature after a set amount of time, and you will no longer be eligible for death benefits.

So we are saying,

While these plans provide life and health insurance benefits, they cannot be considered alternatives for pure-term or health insurance plans. It can be viewed as a supplement to your life and health insurance plans. For example, most term insurance plans have no maximum sum assured, although most plans with life and health benefits have. Thus, it may not give appropriate death benefits.