Introduction:
In 2025, the awareness around personal finance and protection plans in India is growing rapidly. More people are now investing in both term insurance and health insurance — but many still confuse the two.
Both policies serve different purposes. Yet people often ask: “Should I buy term insurance or health insurance first?” or “Is health insurance enough to protect my family?”
This blog breaks it down for you clearly. You’ll understand what each plan does, how they protect you, who should buy them, and how they work differently — with real-world examples.
The Core Difference in One Line
Health insurance protects you while you’re alive, covering hospital and treatment costs.
Term insurance protects your family after your death, by giving them a lump sum payout.
Let’s now understand both policies in detail.
What Is Term Insurance?
Term insurance is a type of life insurance plan that provides financial protection to your family if you die during the policy term. You pay a small premium every year, and in return, your nominee gets a large lump sum amount if anything happens to you.
There is no return if you survive — it is purely for protection, not investment.
Example:
You’re 30 years old and buy a ₹1 crore term insurance policy. You pay ₹10,000 per year. If you die at 45, your family receives ₹1 crore tax-free. If you live till 60, no payout is made.
Key Benefits of Term Insurance:
- High coverage at low premium
- Financial safety for dependents
- Tax benefits under 80C and 10(10D)
- Option to add riders like accidental death, critical illness, etc.
What Is Health Insurance?
Health insurance pays for your medical expenses if you fall ill, get injured, or require hospitalization. It is meant to protect your savings from high hospital bills.
In 2025, with rising medical costs, even a simple surgery can cost lakhs. A good health insurance plan ensures that those costs are not coming from your pocket.
Example:
You are admitted to a hospital for appendix surgery that costs ₹80,000. If you have a health policy with ₹5 lakh cover, your insurance company will pay the entire ₹80,000 (as per the policy terms).
Key Benefits of Health Insurance:
- Covers hospitalization, surgeries, tests, ICU, etc.
- Some plans offer cashless treatment at network hospitals
- Covers pre and post-hospitalization
- Tax benefit under section 80D
Which One Should You Buy First?
If you are earning and your family depends on you — term insurance should be your first priority.
If you are concerned about hospital bills or already facing health issues — health insurance should come first.
But in 2025, the ideal situation is to have both.
- Term insurance = Future protection for family
- Health insurance = Ongoing protection for you
Even salaried people with company health cover should buy their own health plan. Job changes or layoffs can cancel employer insurance, and illnesses don’t wait.
Real Life Scenarios – How Each Helps
Scenario 1: Sudden Accident, You Survive but Need ICU
- Health insurance will pay your ₹3–4 lakh medical bill.
- Term insurance will pay nothing since you survived.
Scenario 2: You Pass Away in an Accident
- Term insurance will pay your family the full coverage amount.
- Health insurance may cover hospital bills (if there were any), but won’t provide lump sum to the family.
This shows that both serve different but equally important purposes.
Common Myths Around Term and Health Insurance
- “I’m young and healthy, I don’t need insurance.”
Illness or accidents don’t wait for age. The earlier you buy, the cheaper the premium. - “Term insurance is a waste if I survive.”
It’s not an investment — it’s security for your loved ones. Like a seatbelt, you hope it’s never needed, but you still wear it. - “My company gives insurance, I don’t need another one.”
Employer health cover ends with the job. You need your own policy. - “One is enough; I don’t need both.”
They protect from completely different risks. You need both for full financial safety.
Final Thoughts:
In 2025, being financially smart isn’t just about saving or investing — it’s about protecting.
Health insurance protects your present.
Term insurance protects your family’s future.
If you’re earning, supporting your parents or spouse, or have children, term insurance is essential.
If you’re concerned about medical emergencies, rising costs, or even minor health issues — health insurance is equally critical.
Don’t wait for something to go wrong before you act. Protect what you’ve built. Secure those you love. Make insurance a core part of your financial planning this year.