Medical Insurance vs Medical Loan: Which one is better?

Health is the greatest asset that mankind has. The world would have been a beautiful place if we all were healthy and we never had to care about situations where our health would degrade. But that is fiction, and the fact remains that we need to be prepared for the worst-case health scenarios at all times. Just like illnesses never come with an announcement, neither do the troubles in the course of their treatment.

These troubles are of various forms – physical, emotional, psychological and even financial. And, the last one hurts the most. But there are many avenues to cope with that. Companies and co-operations sell medical and health insurances that cover certain aspects of the expenses incurred. And, Banking and Non-Banking Financial Companies (NBFCs) offer personal loans for medical emergencies that help in the payment for medical bills and expenses. 

It is often a tough choice for people between personal loans and medical insurance, so it is important to know what they are, what are the key differences between them, and some advantages of both.

Medical Loan

A medical loan is a kind of personal loan that is availed to pay for any present or rising expenditure related to health or urgent medical needs. It can be used to pay for operations, medications, therapies, surgical procedures, etc. Many NBFCs offer such loans at attractive interest rates.

Medical Insurance

Health insurance is a protective measure, a kind of insurance to pay for the full or part of your medical expenses, as per the terms of the policy you have bought. Accordingly, either the person with the insurance is reimbursed against medical expenditure bills, or the care provider is directly paid by the insurance company. 

Key differences between medical loans and medical insurance


  • Time of availing


One of the most obvious, but significant, differences between a medical loan and a medical insurance is that the former may be availed at the time of any financial emergency resulting out of a medical expenditure, while the latter needs to have been bought before any illness or accident occurs in order to cover the medical expenses.


  • Coverage


Another important difference between the two is the scope of coverage. A medical loan can be used for anything related to medical treatments – surgeries, prescription bills, or hospitalization. Health insurance is based on covered expenses. Depending on the type of policies bought, the insurance covers some aspect of the treatment. For example, medical insurance may cover just hospitalisation and not critical illness.


  • Amount


Other than that, medical insurances have a fixed amount based on the policy bought. For example, if you have bought insurance for Rs 4 lakh, any expenditure above that will be borne by the buyer him/herself. Since a medical loan is a personal loan for medical emergencies, it can be applied for the whole sum of the treatment cost, and can be paid back in the form of Equated Monthly Instalments (EMIs).

Advantages of Medical Loans and Medical Insurance

Some key advantages of having a medical loan are 

  1. Easily approved and processed
  2. Covers all aspects of treatment cost
  3. Is available after a couple of days of applying 
  4. Can be applied for up to Rs 25 lakh

Some key advantages of buying medical insurance are

  1. Enables cashless hospitalization
  2. Provides tax benefits
  3. Saves from financial stress
  4. In some cases, can be applied for up to Rs 1 crore

Some flaws of medical insurances

Medical insurance may not be available to everyone (e.g. People with a history of serious illness), it may not provide cash in times of need (asking receipts for reimbursement instead), and it may not cover the treatment of critical illnesses.

In such cases, a medical loan emerges as a saviour. Personal loans for medical emergencies can be availed from Tata Capital. It is provided with interest rates starting as low as 12%, minimum paperwork and appropriate guidance.

It is important to strive for fitness and health, but it is prudent to prepare for illness.