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What is the Difference Between a Mediclaim Policy, Health Insurance and Term Insurance?

Know the detailed comparison between Mediclaim Policy, Health Insurance and Term Insurance. Choose the right plan for your needs. To read more, Visit Now

  • Mar 10, 2021

At some point in life, we all need healthcare. At such times, it is vital to have the necessary financial backing for you and your loved ones, to not only cover the costs of healthcare but to also prevent a mountain of debt. To ensure your financial security in the future, you need to plan in the present. Financial planning with the help of mediclaim insurance, health insurance, and term insurance can reduce the burden of expenses when a health crisis strikes while providing monetary support in your absence.

Term insurance,health insurance and a mediclaim policy

A mediclaim policy, a health insurance plan, and a term plan – all provide financial coverage in exchange for the payment of premium by the person who avails it. However, this is where the similarity ends. All three types of insurance provide a varying scope of benefits for different health needs and eventualities

 What is the difference between mediclaim and health insurance?

What is a mediclaim policy?

A mediclaim policy is a type of insurance cover that provides only limited financial protection for specific health needs. The extent of coverage in a mediclaim policy is pre-defined and restricted to specific ailments, accidents, and injuries. In the event of an unforeseen health crisis, a mediclaim policy will only take care of the costs of in-patient hospital care at an allopathic facility or domiciliary care (treatment at home). It does not settle ancillary medical expenses or provide financial support to the policyholder’s/insured person’s family. Moreover, a mediclaim policy covers hospitalization costs up to ₹5,00,000 only.

What is health insurance?

Health insurance is a type of insurance product that provides extensive financial protection for a wider scope of health issues. The extent of coverage in health insurance is more than that of a mediclaim policy. A policyholder/ insured person receives all-round protection in the event of an illness, injury or accident. Health insurance settles the costs of hospitalization for medical treatment and the cost of additional medical expenses. It takes care of pre and post-hospitalization expenses, expenses for domiciliary care, and expenses for non-allopathic treatment systems (AYUSH - Ayurveda, Yoga, Unani, Siddha and Homeopathy). It also includes the costs of various surgical procedures, traditional and modern forms of treatments, outpatient treatments, medicines, and ambulance and transportation charges, among other allied expenses. .

What is term insurance?

Term insurance is a type of life insurance product in which the family members receive financial support in the unfortunate event of the policyholder/insured person’s death. This financial support is in the form of a pre-fixed monetary sum (called a sum assured) that is paid to the policyholder’s chosen nominee(s) or beneficiary upon their unfortunate demise. To receive the sum assured, the policyholder has to pay a specific premium during the policy term.

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Difference between health insurance and term insurance and a mediclaim policy


Health insurance

Term insurance

Mediclaim policy

Scope of coverage

extensive and all-round financial coverage to the policyholder/person
insured. It covers:

● Various health ailments
and eventualities

● Costs of pre and
post-hospitalization care

● Costs of in-patient
hospitalization care

● Costs for daycare
procedures, non-allopathic treatment systems (AYUSH), organ donor
transplantation, modern/ advanced technology treatments and a range of other
treatments and surgical procedures

● Costs of ambulance and
transportation services

● Costs for diagnostic
tests, annual health check-ups, second consultations, etc.

Provides a
pre-fixed monetary amount (sum assured) to a policyholder’s nominee/
beneficiary in the event of his/her untimely death

limited/ specific coverage to the policyholder/person insured. It covers:

● Specific health
ailments and eventualities

● Costs of in-patient
hospitalization care

● Costs of domiciliary
hospitalization (home care treatment)

Amount of sum insured (SI) or sum
assured (SA)

Up to
₹1,00,00,000 and above

Up to
₹20,00,000 and above

Up to
₹5,00,000 only

Types of policies

● Individual health
insurance policy

● Family floater health
insurance policy

● Critical illness health
insurance policy

● Senior-citizen health
insurance policy

Personal and group accident health insurance policy

● Corporate group
(employer-employee) health insurance policy

A single
type of policy available
for individual only (some insurance companies offer an option to add the
spouse to the policy)

● Individual mediclaim

● Family floater
mediclaim policy

● Senior-citizen
mediclaim policy

● Critical illness
mediclaim policy

Add-on covers/ riders

● Critical illness cover

● Maternity cover

● Newborn baby cover

● Personal accident cover

Diabetes, cardiac issues, cancer, autism, and other
specific illnesses cover

● Accidental death
benefit rider

● Permanent disability

● Critical illness rider

No option
to add extra covers

Premium payment

low to high premium payment, depending on the SI

low to high premium payment depending on the SA

low payment of premium

Mode of premium payment

single payment/regular payment

single payment/regular payment

single payment/regular payment

Timeline for premium payment

quarterly, half-yearly, or yearly

quarterly, half-yearly, or yearly

quarterly, half-yearly, or yearly

Policy term

1-3 years

5-30 years

1-3 years

Claim settlement

● Cashless claim

● Reimbursement

lump-sum payment or part payment + regular installment payouts of SA for a
few years

● Cashless claim


Tax benefits

deduction (return) under Section 80D of the Income Tax Act, 1961

deduction (return) under Section 80C and Section 10(10D) of the Income Tax
Act, 1961

deduction (return) under Section 80D of Income Tax Act, 1961


● Highly flexible

● The policyholder can
choose the scope of coverage

● The policyholder can
choose the SI amount

The policyholder can select the term of the policy

● Highly flexible

● The policyholder can
choose the scope of coverage

● The policyholder can
choose the SI amount

The policyholder can select the term of the policy

● Inflexible

● Has a limited range of

● Can choose the type of

● Cannot get an SI amount
beyond the set limit.

Protect your loved ones with Kotak e-Term Plan

An untimely death can cause not only emotional but also financial stress to your family. Protect your loved ones in your absence with Kotak’s Term Plan that provides a financial cushion to those who matter the most to you in times of need.

Kotak e-Term Plan offers:

  • A high level of coverage at affordable premium rates.
  • A minimum sum assured amount of ₹3,00,000 and a maximum sum assured of ₹24,99,999.
  • The option to avail the plan for 5 to 30 years.
  • Flexibility in paying premiums – single one-time mode or regular mode of payment.
  • Additional protection with covers like:
  • Kotak Accidental Death Benefit Rider that provides an additional death benefit to the beneficiary along with the base sum assured in case of death of the life insured/ policyholder due to an accident. o Kotak Permanent Disability Rider that provides the benefit amount in instalments in case of permanent disablement of the life insured/ policyholder.

    Kotak Critical Illness Plus Benefit that provides a lump-sum or part payment of the sum assured in case the life insured/ policyholder is diagnosed with a critical ailment.

Get high coverage with Kotak Health Shield

Life insurance plans like the Kotak Health Shield offer you a dual advantage. It gives a monetary benefit to your loved ones in case of your unfortunate demise, in addition to providing you financial coverage for 4 types of life-threatening critical illnesses. The plan also offers protection against accidents and permanent disability.

The Kotak Health Shield Plan offers:

  • A minimum sum assured of ₹10,00,000 and a maximum sum assured of ₹50,00,000 (cap of ₹1,00,00,000, if the policyholder chooses multiple plan options).
  • Coverage for the individual (policyholder) and spouse.
  • Flexibility in paying the premium – single payment or regular payment mode.
  • The option to avail the plan for 5-40 years.
  • Cover for 4 early and end-stage critical illnesses. Shields included – Cancer Shield, Cardiac Shield, Liver Shield, and Neuro Shield.
  • Cover for personal accident and permanent disability that provides the benefit to a policyholder’s beneficiaries.
  • Option to enhance base coverage and add:
  • Daily hospital cash benefit o An income benefit upon diagnosis of major health conditions o A waiver on premium upon diagnosis of minor health conditions

  • An inbuilt wellness benefit that provides:
  • A second medical opinion o Emergency evacuation services o Medical monitoring and medical repatriation o A compassionate visit benefit

Summing up:

The key difference between term insurance, health insurance, and a mediclaim policy lies in the type of health risk covered and the type of protection provided.

  • A mediclaim policy covers only in-patient hospitalization costs for an illness, injury, or accident.
  • Health insurance covers pre-, post- and in-patient hospitalization costs and all allied medical treatment expenses for an illness, injury, or accident.
  • Term insurance provides a SA to a policyholder’s nominee(s)/ beneficiary in the event of his/ her untimely demise.

The type of coverage you need depends on your financial requirements and life goals. To protect yourself and your family against an unforeseen health crisis, you can opt for a mediclaim policy or a health insurance plan. And to give your loved ones the quality of life they deserve, even after you are gone, you can buy a term insurance plan.

Assess your present and future health concerns, and factor in your budget to chalk up a practical financial plan and pick the right insurance policy.

Kotak e-Term

Download Brochure


  • Life Cover till 85 years for Life & Life Secure Option
  • 3 Payout Options
  • Special Rates for Women
  • Option to exit the policy with premium refund at the age of 60*
  • Special Rates for Non-Tobacco Users
  • Free Medical Check Up every 5th year**

Ref. No. KLI/22-23/E-BB/2435


- A Consumer Education Initiative series by Kotak Life

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