Term Insurance vs Health Insurance: Two Different Kinds of Protection

Insurance products sold through banks (bancassurance) typically fall into life and general/health insurance, each regulated by IRDAI and serving a distinct protection purpose rather than being interchangeable.

Term insurance. A pure life insurance product that pays a lump sum to nominees if the policyholder dies during the policy term, with no maturity payout if the policyholder survives the term — making it a relatively low-cost way to secure a large protection cover.

Health insurance. Covers medical treatment costs — hospitalisation, and depending on the policy, pre/post-hospitalisation and select outpatient expenses — reimbursing or cashlessly settling costs incurred due to illness or injury during the policy period.

IRDAI's role. The Insurance Regulatory and Development Authority of India regulates insurers and intermediaries, sets conduct and disclosure standards, and oversees grievance redressal for policyholders.

Claim settlement. Both product types require timely, accurate documentation for a smooth claim — nominee and cause-of-death details for term claims, and hospital bills/treatment records for health claims — and insurers publish claim settlement ratios that can be a useful (though not sole) reference point when comparing insurers.