Term insurance vs. health insurance: Making the right choice


22 Nov 2023

Decoding Choices: Term Insurance vs Health Insurance with Kotak

The pandemic underscored the critical importance of having a financial safety net through insurance. Today, insurance has become a vital step towards achieving financial freedom. Among the various available policies, the two most widely discussed options that you may come across are term life insurance and health insurance policies. When it comes to term insurance vs health insurance, you need to understand that term Insurance and health insurance both serve distinct but equally important roles in one’s financial planning.

Term insurance vs health insurance

The table below will help in understanding the difference between term insurance and health insurance:


Term Insurance

Health Insurance


Term insurance pays a lump sum amount to the nominee in case of the death of the insured during the term of the policy.

Health insurance also called a mediclaim policy, is designed to cover medical expenses that may arise due to a planned or emergency hospitalisation.


Term insurance is a kind of life insurance that is designed to provide financial security to your loved ones in case of an unfortunate event.

With health insurance, you can get financial help to cover your as well as your family’s health-related expenses.


Typically, the policy duration starts from 5 years and can continue till the person turns 100 years.

Most health insurance companies offer coverage for 1 year, which can be renewed yearly. You may have the option of buying multi-year plans.

Tax benefits

The premium that you pay is tax deductible under Section 80C. The payouts can also offer tax benefits under certain situations.

You can get tax deductions up to INR 1.5 lakhs under Section 80D against the premium you pay.

Cost of the policy

Term insurance is said to be the most affordable form of life insurance.

The premiums of a mediclaim policy depend on the kind of plan and coverage you have.

Health insurance vs term insurance: Which is better?

Term insurance is primarily designed to provide financial security to your dependents in case of your demise during the policy term. It offers a lump sum payout to the appointed nominee. On the other hand, health insurance plans by Kotak health insurance are designed to cover medical expenses, including hospitalisation, doctor’s fees, room rent, medicines etc. It helps mitigate the financial burden of unexpected medical issues.

It is also imperative to understand that while both these policies offer financial aid, one cannot be a substitute for the other. Therefore, we recommend that you invest in both as per your needs and budget.


So, we can conclude that when it is health insurance vs term insurance, there isn’t really a clear winner. Both of them are equally significant, especially when you have a family to look after. The challenge often lies in navigating the multitude of insurance options available and identifying an insurance policy that offers comprehensive coverage and additional benefits to meet your specific needs. Whether you need both or have to make a choice between the two depends on your individual needs and circumstances.

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Team Kotak GIC

The content of this blog has been created and carefully reviewed by the esteemed team at Kotak General Insurance, with the sole purpose of providing valuable guidance and sharing insights on the importance of general insurance. Our objective is to assist users in making informed decisions when purchasing or renewing insurance policies for their cars, bikes, and health. Our expertly curated information aims to empower our readers with the knowledge they need to protect their valuable assets and financial interests.