This seems to be a larger question at an early stage of your career. Answering this question becomes more critical when you have an education loan to pay back and your parents depend on you solely. Though insurance in any form is very important to protect you against any unwanted emergency but when money left out post all your expense is very small the finding the right combination of insurance plans is a tough question to answer. It is also whimsical to think of a life insurance plan with perfect amount of cover with added health insurance add-on would be a the best solution to look for but a option like this still not available in the market .
The situation can be well analyzed if we take the case of Vivek. Vivek is just 25 years of age and works with a reputed IT firm in Bengaluru. He is set to marry in couple of months and plans to buy a term plan and health plan so that his financial plan becomes more robust. Any insurance at his age would be quite cheaper but which one he should buy would depend on the money he can spare each year for it. In Vivek’s case it is Rs.20000 after repaying education loan EMI, paying for home rent and supporting his parents financially. If we look at the scenario from the number front he can either get a term cover of Rs.1.5 cr or an health insurance cover of Rs.7 lac with the money he can spare so the question that need to answered now is which one should be given a priority?
If we look from the insurance angle both risk related to death and health need to be covered at any point of time. On on one hand since Vivek’s is the only bread earner in the family and the liabilities associated with him is higher life insurance should be thought as the most effective option to look for. Though he can’t ignore of getting medically sick as in his age since the probability is less but if he is considering a family health cover his parents can fall sick any time and which can lead to serious financial emergency. In a case like though Vivek can consider a personal loan to handle the issue but in that case his personal liability would increase considerably. Other thing that Vivek should look in this case is he is also covered under any Group term cover or health cover by this employer. What Vivek’s need to do is to evaluate the risk and evaluate the amount of cover he would. He can forgo some amount of some of the sum assured for the term insurance and plan the health insurance accordingly to bring things into perspective.
Though if we evaluate for Vivek’s financial condition, life insurance outweighs health insurance but we should always keep in mind that any kind of insurance is important. If Vivek can built a portfolio of both type of insurance at his early age things would definitely cost him lower and would be effective for his long term financial health. The best answer to the question that which should be given more priority –Life or term is that Vivek should think of splitting his available money in such a proportion so that he can have both of them. A slight compromise today can cost him more in the future.