life vs health vs term Insurance

Difference Between Life vs Term Insurance VS Health Insurance

Compare life, health, and term insurance to understand key differences, benefits, and how each protects your financial future.

Written by : Knowledge Centre Team

2026-02-09

1236 Views

10 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

In your professional life, you may have aspired to achieve various goals. You work hard and earn and make sure your life is worthwhile. You look to fulfil all the goals you thought of and see your family members achieve their investment goals, too.

But life is uncertain. What if you were the only earner and lost your life suddenly? In such a case, your family would get into a financial crisis. All that they have thought comes to a halt.

To make sure that the goals and dreams of your family members are achieved, life insurance is necessary. This blog will break down the difference between life insurance, term insurance, and health insurance, making it easier for you to make smart and informed decisions.

Key Takeaways

  • Prepaid insurance involves paying premiums in advance, ensuring uninterrupted coverage while being recorded as one of the current assets on the balance sheet

  • Prepaying insurance helps with budgeting, offers potential discounts, and provides tax benefits under Section 80C, allowing deductions up to ₹1.5 lakh annually

  • While prepaid insurance improves financial transparency, it requires an upfront payment, reducing liquidity for businesses and individuals

  • Prepaid insurance limits policy adjustments, and policyholders may miss out on new features or reduced premiums introduced by insurers later

  • Unlike prepaid insurance, accrued insurance is recorded as a liability, covering expenses before payment is made, impacting financial planning differently

What is Life Insurance?

Life insurance covers your life and provides financial assistance to your family members after you are no longer with them. The policy will provide you with lump sum money for your dependents in the event of your death.

In return for this coverage, you are required to pay small amounts regularly known as premiums. Without payment of premiums, your policy cannot be active. Life insurance includes various products such as ULIPs, Savings plans, Term plans, etc.

Get Life Cover Instantly

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

What is Health Insurance?

Health insurance proposes to cover all or part of your expenses that arise from illnesses in exchange for regular premium payments. As the medical costs are rising with each passing year, the importance of having a health insurance plan for you and your family cannot be neglected.

There are two types of health insurance:

  • Mediclaim
  • Critical Illness plan

What is a Term Insurance?

Term insurance is a type of life insurance that offers you life coverage for a specific period or a ‘term’. It is the simplest and most affordable form of insurance.

  • The term for which you can take a policy can range from 5-30 years
  • You select the term for your choice and pay the premiums during the term
  • If you die during your policy term, your family will get the sum assured agreed upon by you at the time of purchase
  • However, if you survive the policy term, you are not liable to receive any benefit on maturity
  • Some plans such as iSelect Smart360 Term Plan from Canara HSBC Life Insurance offer you a return of premium option. You will get the sum you have paid towards premiums back if you survive the policy term

Also Read - 5 Year Term Insurance Plan

Difference Between Term Insurance and Life Insurance

Though life insurance and term insurance work towards the same purpose, both policies have certain differences as well.

  • The primary difference lies in the duration of plans. A term plan offers you protection for a specific duration only. On the other hand, Life insurance provides coverage for the entire lifetime of the policyholder, along with the option to build long-term financial security through savings or investment components
  • Term insurance offers you death benefits. Life insurance provides you with death benefits as well as maturity benefits. However, the term insurance’s death benefit is significantly higher
  • Premiums of term insurance are much lower than the premiums of life insurance plans
  • The maturity benefit of life insurance is free from taxes

Life Insurance vs Health Insurance vs Term Insurance

Here are the differences between these 3 most popular types of insurance

BASISLIFE INSURANCEHEALTH INSURANCETERM INSURANCE
MeaningA type of insurance that provides for lifeA type of insurance which covers expenses that arise from illnessesInsurance that provides life coverage for a specific term.
Plan DurationPlans range from 5-30 years. Certain plans offer coverage up to 100 yearsShorter duration. Ranges from 5-10 yearsRanges from 5-40 years
Cash ValueThese policies build a cash valueNo cash valueNo cash value
PremiumsPremiums are higher compared to term insurance.Premiums are moderate. They increase with agePremiums are affordable
Death benefitThe death benefit is provided to the family in case you die during the policyHealth insurance includes no death benefitYes, the death benefit is provided to your family if you die within the policy term
Maturity BenefitMaturity benefit is received after the policy term is over provided the premiums are paidProvides cover for medical emergencies (hospitalisation expenses) till the policy is activeNo benefit on maturity. Return of premiums available in some plans
BonusesBonus added for long-term and regular investorsThe sum assured increment may happen for claim-free yearsNA
Tax Benefits on Premiums PaidTax deductions available u/s 80C and 10(10)D on the death benefitTax deductions available u/s 80DTax deductions available u/s 80C and 10(10)D on the death benefit
Tax Benefits on the ValueTax deductions available u/s 10(10)D in case of ULIP plans bought on/after 1 Feb 2021.No such benefit is availableNo such benefit is available

Thus, you should use the life insurance plans for specific life goals like retirement, a child’s education etc. On the other hand health and term insurance plans should be used to protect your family’s future financially.

Why and When Should You Opt for These Insurance Plans?

Choosing the proper insurance policy is based on your future security needs, financial goals, and obligations. Therefore, it is important to know why and when you need to select each type of insurance:

Life Insurance:

  • Life insurance is ideal if your dependents live on your paycheck. It provides financial security for your loved ones when you are gone.

  • It also supports long-term money planning as there are life insurance policies that include savings and investments.

  • What separates life insurance and term insurance from health insurance is that life insurance can have investment components, term insurance is purely for protection, and health insurance is to pay for health bills.

Term Insurance:

  • If your top priority is safeguarding your family's financial health at an affordable price, term insurance is the best option.

  • You can opt for it if you have financial responsibilities like a mortgage, school fees, or any other financial obligations.

  • Term insurance provides low-cost high coverage and is most essential for single breadwinners.

  • One of the most important factors in term insurance vs life insurance vs health insurance is that term insurance offers risk coverage only without any maturity benefits, while life insurance can offer a savings component.

 

Health Insurance:

  • As medical costs rise, health insurance ensures that you and your loved ones will not incur financial losses because of medical emergencies.

  • One ought to purchase a health insurance cover early in life when it is still affordable.

  • Whether you take Mediclaim or a Critical Illness Plan, medical cover can help avoid hospitalisation and treatment out-of-pocket costs.

  • The difference between term insurance, life insurance and health insurance is that health insurance is solely about paying medical bills, but life and term insurance cover you financially for other people's sake.

By clearly understanding how term insurance, life insurance, and health insurance differ, you can choose the coverage that best aligns with your requirements.

trivia-img

Did You Know?

Life insurance policies can be tailored with "riders," enabling policyholders to access benefits before death.

 

Source: Investopedia

 

Young Term Plan - 1 Crore

Final Thoughts

A life insurance policy is a crucial financial tool that provides security and peace of mind for you and your loved ones. Whether it is a term insurance plan for pure protection or health insurance to cover medical expenses, choosing the right plan at the right time plays a key role in ensuring long-term financial well-being.

By investing in life and health insurance early, you can secure your family’s future, enjoy tax benefits, and protect yourself against unexpected financial burdens. Life is unpredictable, but with the right insurance policy, you can stay prepared for any uncertainties while ensuring financial stability for yourself and your loved ones.

Glossary

  1.  Premium: Regular payment by the policyholder to keep the policy active; failure to do so can lead to the policy lapsing
  2. Sum Assured: The amount assured is paid to the nominee in case of death or policy maturity, according to policy conditions
  3. ULIP: A life insurance product that integrates market-linked investment along with life protection in one policy
  4. Critical Illness Plan: Pays a lump sum on diagnosis of major illnesses like cancer, stroke, or heart attack
  5. Maturity Benefit: The benefit paid at the policy term's close in savings-oriented life insurance policies
glossary-img
Uncertain About Insurance

FAQs

Term insurance alone is not enough for complete protection. While it covers financial security for your family in case of death, life and health insurance together address different risks. Understanding term insurance vs. life insurance vs. health insurance shows that combining them offers more balanced, long-term protection.

The difference between term life insurance and health insurance lies in what they protect. Term insurance provides a death benefit, while health insurance covers medical expenses like hospitalisation. This highlights the difference between term insurance and health insurance, as one protects income and the other protects savings.

Yes, life insurance and health insurance can be used together to create complete financial protection. Health insurance covers medical expenses during illness or hospitalisation, while life insurance secures your family’s financial future in case of an untimely death. Together, they ensure both health-related costs and long-term financial responsibilities are well protected.

There is no single “better” option; each serves a different purpose. Term vs. life vs. health insurance should be seen as complementary, not competing. Term insurance offers high coverage at low cost, life insurance supports long-term goals, and health insurance safeguards against rising medical expenses.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

How do I Surrender my Life Insurance Policy?
18 Feb '26
890 Views
6 minute read
Learn how to surrender your life insurance policy, reasons not to, required documents, and whether you can surrender your term plan with Canara HSBC Life Insurance.
Read More
Life Insurance
Can I Buy A Life Insurance Policy For Someone With A Critical Illness?
17 Feb '26
879 Views
Life insurance may be difficult to obtain if you suffer from a critical illness. However, it is not impossible. Here are the details regarding this kind of life cover.
Read More
Life Insurance
Where Do Life Insurance Companies Invest Your Premiums?
17 Feb '26
2417 Views
10 minute read
Curious where life insurance companies invest your money? Get insights into how your premiums are managed for long-term growth and security.
Read More
Life Insurance
5 Ways to Cash Out a Life Insurance Policy in 2026
17 Feb '26
4908 Views
15 minute read
Learn five common ways to cash out a life insurance policy, including surrender, loans and withdrawals, and understand the impact on coverage and payouts.
Read More
Life Insurance
Prepaid Insurance: Meaning, Examples & How Does it Work?
17 Feb '26
1553 Views
6 minute read
Learn about prepaid insurance, its benefits, and why it’s crucial for securing your financial future by ensuring continuous coverage without interruptions.
Read More
Life Insurance
What is Risk Retention in Insurance? Meaning & Importance
17 Feb '26
2152 Views
7 minute read
Learn about risk retention in insurance, its meaning, importance, and how it helps manage financial risks. Explore with Canara HSBC Life Insurance.
Read More
Life Insurance
How Life Insurance Reduces Financial Stress During Illness?
12 Feb '26
62 Views
7 minute read
Learn how life insurance helps manage medical expenses, income loss, and family financial security during serious illness with practical examples.
Read More
Life Insurance
What Is Non-Traditional Life Insurance & Why It Matters?
11 Feb '26
129 Views
5 minute read
Explore non-traditional life insurance plans, how they differ from traditional policies, and why they matter for modern financial planning.
Read More
Life Insurance
GST on Life Insurance: Rates, Charges & Rules in India
10 Feb '26
2899 Views
10 minute read
What impact does the Goods and Services Tax have on life insurance plans and your premium payments towards them? Here’s all you need to know.
Read More
Life Insurance

Life Insurance - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover