Medical Loan vs Health Insurance

health insurance policy
health insurance policy

Unfortunately, he met with an accident that caused brain hemorrhage. The cost of the treatment was 20 lakhs. With no insurance cover his family had to avail a medical loan for his treatment. Not just this, his family also had to go through a lot of physical and emotional trauma. With medical expenses on the rise and an increase in lifestyle-related diseases, having a health insurance policy has become significant.

While some people rely on health policy to pay for medical expenses, some are not prepared and depend on availing a personal loan in case of emergency. Today, banks and NBFCs offer personal loans for medical emergencies that can help an individual pay for medical expenses.

If you too are thinking of choosing between a medical loan or health insurance, then read below to know the difference between the two.

Medical Loan

This is a type of personal loan that helps one take care of various medical expenses including surgery costs, operation, and other medical conditions.

Health Insurance

This is a type of insurance that provides coverage for medical expenses based on the coverage amount chosen by the policyholder. Coverage is offered based on the premium paid which is decided based on age, income, existing medical condition, etc. A cashless treatment facility can be availed at the network hospital of the insurance company. In case the hospital is not a part of the insurance company’s network then reimbursement is provided wherein the insurer has to provide medical bills and pay for the treatment first and reimburse the bills later.

What’s the difference?

Health Insurance is purchased as a precautionary measure to combat medical inflation and take care of medical expenses in case any medical emergency strikes.

Whereas medical loan is usually taken only after a medical emergency strikes.

Health insurance provides coverage for certain illnesses after a waiting period of 2-3 years. Depending on the insurer and the plan chosen, coverage may or may not be provided for critical illnesses like cancer, kidney failure, etc. whereas, a medical loan does not come with any waiting period or limitation. The loan amount can be used immediately for the treatment of any kind of medical condition.

Health insurance premiums can be paid in EMIs and it does not have any impact on the credit score of the borrower. However, medical loans have to be repaid in EMIs based on tenure, interest rate and the loan amount chosen.

Health insurance has to be renewed every year I.e premium has to be paid every year irrespective of whether you claim or not. On the other hand, medical loans are only opted for when necessary.

Medical loans can be taken by any salaried, self-employed individual. Health insurance can be purchased by any individual having no previous major history of heart attack, cancer, etc.

It is important to keep in mind that health insurance premium increases in case if the policyholder has pre-existing medical conditions like diabetes, cholesterol, etc. Based on the existing condition, the insurance company may charge you a higher premium or deny coverage.
Medical loan benefits
Quick approval and disbursal
Covers all types of medical conditions
Money can be used to take care of all types of health expenses
Collateral free loan
Flexible EMI tenures
Health insurance benefits
Covers hospital bills
Provides tax benefits up to Rs.1 lakh
Saves you from liquidating your savings
Can avail health cover of Rs. 1 crore and above


When it comes to buying the best health insurance in India, keep in mind various factors such as coverage, premium, room rent, waiting period, etc. because all these factors can increase your out of pocket expense in the future. And if you plan to opt for a medical loan, consider the interest rate and the tenure as higher the tenure, lower the interest and vice versa. When choosing between the two-think long term because buying insurance at old age would increase the premium you would have to pay.

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