Insurance confuses everyone. Walk into any office, and they throw ten different policy names at you. Mediclaim. Endowment. Health cover. Life insurance.
Which one protects you from what? How are they different?
Two products people mix up constantly are mediclaim and an endowment policy. They sound similar because both involve insurance. But they solve completely different problems.
One pays your hospital bills. The other builds savings while protecting your life. Let’s clear up the confusion once and for all.
What Is Mediclaim and How It Works
Mediclaim is health insurance. Pay a premium yearly. Get sick or injured and need hospitalisation, the policy pays your medical bills.
Doctor fees, hospital rooms, surgery, medicines, tests – everything gets covered up to your policy limit. One hospital stay costs 2 to 5 lakhs easily. Mediclaim handles this, so your savings stay safe.
You pick coverage when buying – maybe 5 lakhs or 10 lakhs. Get admitted, and inform the company. They settle directly with the hospital or reimburse you later.
Coverage renews yearly. Premiums increase with age because older people get sick more often. Some policies cover pre-existing diseases after waiting periods. Read the terms carefully.
What an Endowment Policy Does
Now let’s talk about the endowment policy. This is completely different. It’s a life insurance product that combines protection with savings.
You pay premiums for a fixed number of years. During this time, if you die, your family gets a payout. But here’s the twist. If you survive till the end, you get money back.
Not just your premiums. You get your premiums plus some returns. The insurance company invests your money and gives you a maturity amount.
So it’s protection plus forced savings. You’re building a fund while also making sure your family is covered.
When You Get Money from Each
This is the biggest difference between “what is mediclaim?” and an endowment policy.
Mediclaim pays only when you’re hospitalised. Get admitted for surgery? They pay. Just a regular checkup? No payment. Buy medicines from a pharmacy without admission? Usually not covered.
An endowment policy pays in two situations. One, if you die before the policy matures. Two, when the policy completes its term, and you’re alive.
You could pay for 20 years and get nothing from mediclaim if you stayed healthy. That’s actually good because it means you didn’t get sick.
With an endowment policy, you definitely get money after 20 years. Either your family gets it if you die, or you get it yourself when the term ends.
The Cost Difference
Mediclaim is relatively cheap. A 30-year-old can get 5 lakh coverage for around 6,000 to 8,000 rupees per year. A 10 lakh policy might cost 10,000 to 15,000 rupees yearly.
An endowment policy costs way more. For a 10 lakh sum assured, you might pay 40,000 to 60,000 rupees per year. Sometimes even more, depending on the plan and your age.
Why such a huge gap? Mediclaim only covers medical expenses. The company uses your premium to pay claims.
An endowment policy needs to give you money back. So they charge you enough to cover insurance plus save for your maturity benefit.
What Each Policy Actually Covers
Understanding “what is mediclaim?” means knowing what it covers:
- Hospital room rent
- Doctor and surgeon fees
- Medical tests and scans
- Medicines given during hospitalisation
- Surgery costs
- ICU charges
- Ambulance in some policies
- Pre and post hospitalization expenses
Mediclaim does NOT cover regular doctor visits, dental work (unless accident-related), cosmetic surgery, or general wellness checkups.
An endowment policy covers:
- Death benefit if you die during the policy term
- Maturity benefit if you survive the full term
- Sometimes accidental death benefit is an add-on
- Tax benefits on premiums paid
An endowment policy does NOT cover medical expenses or hospital bills. That’s not what it’s designed for.
Can You Have Both
Yes, and you should. They serve totally different purposes in your financial plan.
Get mediclaim to protect against medical emergencies. One serious illness shouldn’t drain your life savings. The policy handles hospital costs, so your money stays safe.
Get an endowment policy if you want life insurance with guaranteed returns. It protects your family if something happens to you. Plus, you get money back for specific goals like your child’s education or marriage.
Don’t try to replace one with the other. Buying only an endowment policy leaves you exposed to medical costs. Buying only mediclaim leaves your family without support if you die.
Which Should You Buy First
If you can only afford one right now, buy mediclaim first. Medical emergencies happen way more often than death.
You could need hospitalisation next month. Nobody plans for accidents or sudden illness. Mediclaim protects you from financial disaster right away.
An endowment policy is for long-term planning. It’s important, but not as urgent as health coverage.
Get basic mediclaim coverage for your whole family. Then add an endowment policy when your budget allows.
Tax Benefits on Both
Both offer tax benefits under different sections:
Mediclaim tax benefits:
- Deduction under Section 80D
- Claim up to 25,000 rupees for yourself and your family
- An additional 25,000 for parents if you pay their premiums
Endowment policy tax benefits:
- Deduction under Section 80C
- Maximum 1.5 lakhs yearly across all eligible investments
- Maturity amount is tax-free under Section 10(10D) in most cases
Plan your insurance purchases smartly using these benefits.
Take Action This Week
Medical emergencies don’t wait for you to get around to buying insurance. Get online quotes for mediclaim today. Compare coverage and price. Pick one that fits your budget and covers your family well.
Then look at endowment policy options if that interests you. But only after mediclaim is sorted.
Your family’s financial security depends on having the right protection at the right time. Make it happen now.
