Term Insurance Plans

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Term Plan or Health Plan, What to Buy if You Have Limited Money?

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The consequences of an early death are quite painful as the emotional trauma of losing a near and dear one is further aggravated by the financial distress. Likewise, if you face a medical illness and you do not have enough money to pay for the treatment costs there is nothing worse than that. Hence, it is desirable that people own adequate insurance to cover the financial risks associated with early death and medical illness. A life insurance or a Term plan would cover the financial liabilities related to death while a health plan would cover the financial liabilities that arise due to a medical illness.

But things are not always so easy and straightforward as they sound. Due to financial constraints it is not possible for a person to gather enough savings to pay for the Premium of a health plan and a term plan both. Such a situation becomes very challenging and the Insured feels inhibited. In such a scenario, it is advisable that the person buys a term plan or a health plan, rather than avoiding both.

When to choose a term plan over a health plan

I would suggest that while making a choice a term plan should be preferred over a health plan if you are the sole bread winner in the family. The most important reason for me to suggest so is the difference in the liabilities related to death and health. If the family is entirely dependent on your earnings for their living and the savings are very limited, just imagine how the family is expected to survive in your absence. The life of the entire family would be disturbed and the children education and even career may have to be compromised. Since the financial implications of an event like death are much more worse it is always wise to have a term plan.

Thus, term plans offer protection against a pretty large liability while the liability related to medical illness is not as huge and distressing. Besides in case of a Term Insurance by paying a few thousand rupees in premium you secure the future of your entire family. A term plan gives you the much needed peace of mind that your family is safe even if you succumb to an early death.

If you do not have a health insurance and you are unfortunate to face a medical illness, I would say that they are still ways to cover the medical liability related to Hospitalization using loans from friends / family / employer.

When you can prefer a health plan over a term plan

If you are not the sole bread winner in the family and there are other members in the family as well who are contributing significantly to the entire family income I would suggest that in such a scenario you should buy a health plan instead. If we consider the probability of occurrence of death versus the probability of occurrence of medical illness requiring hospitalization, it is clearly evident that there is a higher chance that you would need a Health Insurance than a term insurance. More the number of members in the family the probability of requiring health insurance increases. Buying a Family Floater Plan would not only insure you against medical costs related to your own health problems but safeguard your entire family. In case of medical illness you may choose the best hospital and seek the most appropriate treatment for the condition without worrying about the costs. This will assure peace of mind for your entire family and they can focus on their jobs and help improve the family income so that enough savings can be generated to buy a term plan as well.