Life insurance or health insurance, which insurance is a must-buy?
When it comes to buying insurance, a lot of people are split between life insurance and health insurance. Both these types of insurance have their own set of benefits. So, which one should you choose – life insurance, wherein your family will be financially strong in your absence, or health insurance, wherein you will have a strong financial back up to meet medical costs when your health doesn’t support you? Let’s find out.
Understanding life insurance and health insurance
To make a well-informed decision, you must first understand what life insurance and health insurance are. Life insurance is a financial safety net that ensures the well-being of your family in your absence. Such policies offer death benefits, which means that your nominee gets the sum assured or the promised money in case of your untimely death. If you are the sole breadwinner of your family, life insurance becomes all the more essential for you. The money that your insurance provider pays to your family can be used for meeting their day to day as well as long-term expenses such as your child’s education or marriage. It can also be used for clearing off debt. The idea is to provide financial support to your family so that they don’t struggle when you are not around.
Health insurance, on the other hand, takes care of all your medical expenses in case your health deteriorates and you need treatments. These cover the costs of medicines, medical tests, hospitalization, surgeries and other medical treatments. The idea here is to empower you financially to be able to afford quality treatment when the cost of getting treated is soaring by the day.
Which insurance should one buy?
Given the several benefits of life insurance and health insurance, it is wise to opt for both. If it is difficult to afford the premium of both the plans, then the best thing to do is arrive at your suitable cover amount and buy only that much. For example, experts believe that you must have a life cover equivalent to ten times your current annual income. So, you need not buy a larger cover and thus, can savor the benefits of life insurance as well as health insurance.
Who needs insurance?
It is believed that only middle-aged people buy insurance. However, this is not true. Even youngsters and those nearing retirement can and must equip themselves with sufficient life and health insurance.
- Insurance and youngsters
Earlier, old age was often associated with deteriorating health and severe medical issues. Moreover, chronic diseases such as cancer or heart problems were not very common. But today, the scenario is completely different. Severe diseases and disorders are common, and they are not just affecting elderly people. Even youngsters are prone to such fatal ailments. Also, nowadays it is not very uncommon to find young individuals taking care of their family’s financial needs. Thus, they must have a back-up in case anything unfortunate happens to them. One can’t predict the future, but they can always be prepared with a life and health cover. Another reason for buying insurance at a young age is that insurance policies are cheaper for young people.
- Insurance and individuals with dependent family
Individuals with family responsibilities should purchase a life insurance policy to secure the future of their loved ones. Although nothing can make up for your family’s emotional loss, they will have enough money to deal with the financial losses that would occur in your absence. For example, child life insurance plans provide a certain sum to your child at regular intervals when you are not around, even without a premium. They can, thus, fulfil their educational goals.
As discussed earlier, you can buy a cover that is ten times your current annual income. Another way of arriving at an adequate cover is to calculate all the current and future expenses of your family while factoring in inflation. Next, deduct this amount from your total savings. The difference that you get should be your sum assured.
Health insurance in India, too, is not just about you, it also allows you to include your spouse and dependent parents and children. Thus, even if your employer has taken a health insurance plan on your name, you must check if it is sufficient. For example, your existing insurance may not cover critical illnesses such as cancer or heart ailments whose cost of treatment runs into lakhs. If not, you can buy a critical illness policy. Moreover, you can even buy a health insurance plan for your spouse and parents.
- Insurance and elder people
Old age comes with its own share of problems, health and dependency being the major ones. But, with a sufficient life insurance and health insurance cover, you can not only take care of your health but also be financially independent and continue living with pride. For example, there are money back policies wherein your insurer provides certain monetary benefits to you at regular intervals.
You must be covered at all times. If you already have a term insurance plan which is nearing the end of the tenure, it is wise to make efforts to secure yourself for the remaining years. For example, you can take a new term plan that covers you till the age of 99.
Choosing the right insurance policy
With so many life insurance and health insurance plans available in India, individuals are spoilt for choice. However, deciding on a policy is not difficult because you can easily compare different plans and insurance providers online. Also, there are health insurance providers that offer a good discount if you buy health insurance for you and your spouse together. With a good idea of the benefits, inclusions, exclusions, claim settlement ratio, etc. of different insurers, you can pick the most suitable policy for yourself.
To sum it up
Life insurance, as well as health insurance, are important financial must-haves. Choosing an adequate cover for both becomes easier if you assess your health state, responsibilities, age, occupation and other factors.