What is the difference between Health Plan and Critical illness plan?

PRASANTH MENON

05 Jun 2017

New Page 1

In this fast paced life, everybody wishes to grow on their salaries and assets. A biker would dream of buying a four-wheeler, while a guy with a four-wheeler may dream of travelling to exotic places. It is during this rush for things that they forget one small mantra; your health is your greatest wealth. And ironically, you require wealth when your health is in peril. This is where Health Plans and Critical Illness Plans come to your aid.

The Difference Explained

Consider a simple situation of a biker who happened to meet with an unfortunate accident. This man comes from a humble background and cannot afford a hefty sum of Rs 5 lac required to fit his damaged knee back. Consider another situation wherein this man had insured his capital in a Health Plan. The Health Plan would ensure that this man is treated for his knee, all for less or no burden on his pocket depending on the type of plan he chooses. In short, Health Plans have your back if you are injured or happen to fall ill.

Falling ill is a very general term. A person suffering from common cold is termed as ill; so is another person with cancer. Critically ill people are those people who suffer from life-threatening illness such as cancer, kidney failure, heart attack, paralysis etc. The Critical Illness Plan is exactly what the former plan is not.

Health Plans basically take care of your hospital bills. The company issuing health plans either pays out directly to the hospital or reimburses the money spent on the treatment. Critical Illness Plans provide you with a lump sum of the insured money after the insured patient is detected of any critical illness. Most Critical Illness Plan comes a survival period clause. Survival period is the duration that the insured has to survive(14-30 days), after being detecting of the particular critical illness. It is after this period that the insured will receive his premium benefits.

One interesting benefit of Critical Illness Plans is that it could act as a 'secondary income source' when the insured is ill and is on the recovery road. Apart from that, the amount that one receives is totally tax-free. Besides, the cost of the premium remains the same, which saves the trouble of calculating newer premium rates and their interests every year.

Health Plan

Critical Illness Plan

Boots the medical bill.

Provides a lump sum on detection of illness.

Cost of premium varies.

Cost of premium remains the same.

Cannot act as 'secondary source of income'.

Can act as a 'secondary source of income'.

A Common Path

A Health Plan and a Critical Illness Plan, both have benefited the general public on a greater scale. Despite their common goal, they follow two diversified paths only to merge at one. A Health Plan is a must. So is a Critical Illness Plan. If your Health Plan has provisions for it, try to obtain the Critical Illness Plan as an add-on, which would prove to be a cheaper option. A wiser move as this will surely introduce a new saying: Wealth indeed supplements Health.


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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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What is the difference between Health Plan and Critical illness plan?

PRASANTH MENON

05 Jun 2017

New Page 1

In this fast paced life, everybody wishes to grow on their salaries and assets. A biker would dream of buying a four-wheeler, while a guy with a four-wheeler may dream of travelling to exotic places. It is during this rush for things that they forget one small mantra; your health is your greatest wealth. And ironically, you require wealth when your health is in peril. This is where Health Plans and Critical Illness Plans come to your aid.

The Difference Explained

Consider a simple situation of a biker who happened to meet with an unfortunate accident. This man comes from a humble background and cannot afford a hefty sum of Rs 5 lac required to fit his damaged knee back. Consider another situation wherein this man had insured his capital in a Health Plan. The Health Plan would ensure that this man is treated for his knee, all for less or no burden on his pocket depending on the type of plan he chooses. In short, Health Plans have your back if you are injured or happen to fall ill.

Falling ill is a very general term. A person suffering from common cold is termed as ill; so is another person with cancer. Critically ill people are those people who suffer from life-threatening illness such as cancer, kidney failure, heart attack, paralysis etc. The Critical Illness Plan is exactly what the former plan is not.

Health Plans basically take care of your hospital bills. The company issuing health plans either pays out directly to the hospital or reimburses the money spent on the treatment. Critical Illness Plans provide you with a lump sum of the insured money after the insured patient is detected of any critical illness. Most Critical Illness Plan comes a survival period clause. Survival period is the duration that the insured has to survive(14-30 days), after being detecting of the particular critical illness. It is after this period that the insured will receive his premium benefits.

One interesting benefit of Critical Illness Plans is that it could act as a 'secondary income source' when the insured is ill and is on the recovery road. Apart from that, the amount that one receives is totally tax-free. Besides, the cost of the premium remains the same, which saves the trouble of calculating newer premium rates and their interests every year.

Health Plan

Critical Illness Plan

Boots the medical bill.

Provides a lump sum on detection of illness.

Cost of premium varies.

Cost of premium remains the same.

Cannot act as 'secondary source of income'.

Can act as a 'secondary source of income'.

A Common Path

A Health Plan and a Critical Illness Plan, both have benefited the general public on a greater scale. Despite their common goal, they follow two diversified paths only to merge at one. A Health Plan is a must. So is a Critical Illness Plan. If your Health Plan has provisions for it, try to obtain the Critical Illness Plan as an add-on, which would prove to be a cheaper option. A wiser move as this will surely introduce a new saying: Wealth indeed supplements Health.