Aditya works in the corporate sector. He is 30 years old and earns a decent salary. He plans to tie the knot in a few months and wants to buy an insurance plan for himself. However, he only has a small amount of money to spare and is confused about purchasing life insurance or a health insurance plan.
He discusses this matter with his uncle, who is a financial advisor. His uncle starts by explaining the difference between a life insurance policy and health insurance to him.
The main reason why an individual buys a life insurance policy is to make sure their dependents can maintain their lifestyle in the case of an eventuality. In the absence of the policyholder, the life insurance cover is paid out to the dependants. The aim is to purchase an adequate life insurance cover that can replace the policyholder’s income for at least a few years. This helps protect the policyholder’s wealth for future generations while allowing the dependants to maintain their lifestyle as far as possible, at least in the financial aspect.
The purpose of a health insurance policy is different. There is no payout in the case of an eventuality under a health insurance plan. Instead, a health insurance policy is meant to pay for the cost of medical emergencies as they arise.
In today’s fast-paced environment, diseases are on the rise. At the same time, the cost of medical treatment is also rapidly increasing. A health insurance policy can help ensure cashless hospitalization and treatment for several ailments mentioned in the policy. Alternatively, it could provide a lump sum amount to the policyholder to treat some critical diseases, as mentioned in the insurance policy.
Health Insurance or Life Insurance: Which is More Important?
As you can see, both health insurance and life insurance policies hold an important place in a portfolio. An individual may amass a lot of wealth, but one can quickly lose it in paying for medical treatments.
In the case of an eventuality, one’s wealth could be lost in paying for the various financial liabilities of their dependents. Eventually, there may not be anything left for future generations unless a life insurance policy is in place to supplement the dependants’ finances, if and when the worst comes to pass.
At Aditya’s age, it’s possible to get both life and health insurance at an affordable rate. If he is unable to afford two premiums, he may consider a comprehensive insurance plan that offers the benefits of a life insurance policy with a critical illness cover and an accidental disability cover.
HDFC Life’s QuickProtect is a comprehensive insurance policy that provides cover against death, disability and disease. The policy is issued without undergoing any medicals (depending on the underwriting), making it a hassle-free option. The premium paid for the policy can be used to claim an income tax rebate under the applicable section of the Income Tax Act.
An individual can choose from three Package Sum Assured options, depending on their needs and affordability. The insurance plan offers life coverage in the case of an eventuality. Additionally, it pays a regular monthly income equal to 1% of the sum assured per month for up to 10 years in the case of an accident leading to permanent disability or a lumpsum payment in case of accidental death. The policyholder also receives a lumpsum payment when diagnosed with any of the 19 critical illnesses listed in the policy to cover the cost of the treatment.
The Bottom Line
Irrespective of the age and stage in life, having a comprehensive insurance plan to cover one’s loved ones and protect their income in the case of an accident or eventuality is a must. While a term insurance plan provides a financial safety net for the family, health insurance can help ensure the well-being of the family’s breadwinner by paying for their treatment. HDFC Life’s QuickProtect adds another layer of security by including income protection in the case of an accident.
You can visit the HDFC Life website to know more about this plan.