If you want to build a balanced financial portfolio, then consider including both life and health insurance plans. Both these insurance products serve distinctly different goals which can benefit you.
Life and health insurance are the two most popular insurance products in India. However, people sometimes consider purchasing any one of the two insurance types, not realising that both are equally important and complimentary to each other.
Difference Between Life and Health Insurance Plans
Before discussing benefits, let’s briefly revise the differences between life and health insurance.
| Particulars | Life Insurance | Health Insurance |
| Definition | A life insurance plan can financially protect the policyholder’s family in the event of the untimely death of that individual. | A health insurance plan covers the hospitalisation and treatment costs of the insured person. |
| Plan Types | Non-linked Non-Participating plans, ULIPs (Unit Linked Insurance Plans), pension plans, etc. | General health insurance, critical illness coverage, etc. |
Life and Health Insurance Benefits
| Benefits Types | Life Insurance | Health Insurance |
| Principal benefit | One of the key life insurance benefits is it can help the surviving nominees maintain their lifestyle even when the policyholder is no more. | Health insurance can help a person get adequate and quality healthcare without worrying about finances. It can be of immense help during a sudden medical emergency or a grave illness. |
| Extra Benefits | If you survive the entire policy tenure, then you’ll receive maturity benefits with accrued bonuses depending on the policy terms and conditions. | You can include some crucial add-ons by paying some extra premium. These add-ons can include post-hospitalisation cover, daily hospital cash allowance, etc.
Some plans can also offer a No-Claim Bonus (NCB), which can bring down the premium costs in subsequent years if you don’t file any claim. |
| Income Tax benefits (Old tax Regime only) | Section 80C:- Tax deduction on the life insurance premium amount.
Section 10 (10D):- Tax exemption on the amount received under life insurance. |
Section 80D:– Tax deduction on health insurance premium for self, spouse, parents, and children. |
Benefits of Having Both Life and Health Insurance
Consider two different scenarios where a policyholder purchases only one type of insurance-
Scenario 1 (Only Life Insurance)
Suppose a person purchases only life insurance. The person lives long enough but faces health emergencies in the family. The person has to bear all the expenses related to medical costs since there is no health insurance to cover these costs.
Scenario 2 (Only Health Insurance)
Unfortunately, a person dies due to some unforeseen circumstance. But, that individual’s dependent family doesn’t get any financial relief in these trying times as there wasn’t any life insurance to cover them.
As evident from these scenarios, life and health insurance are equally important. As healthcare expenses are rising at an alarming pace, even a brief hospitalisation can cost you a significant amount of money, straining your finances. Therefore, you should always try to have adequate health coverage for yourself and your family.
On the other hand, you can’t predict what’s in store for you in the future. Your life is precious, especially when you’re the family’s sole breadwinner. Therefore, you should avail yourself of life insurance benefits to secure your family’s financial future in your absence.
Simply put, a person should consider having both life and health insurance to live a stress-free life. However, it is equally important to create a balance in your portfolio regarding the allocation of life and health insurance premiums. Reputed insurers provide free online premium calculators to help you have an estimate of different insurance premiums.
Once you’re clear about the amount of money you need to keep aside for insurance, plan forward to get the best of both worlds.
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