Which Insurance Should Young Earners Buy First in India? A Simple Guide

Insurance is often one of the first things people consider when building a solid financial plan. But here's the common dilemma: Should you get health insurance first or start with a term insurance policy?

Both are important, but how do you decide what to prioritise? Let's break it down in a simple, conversational way so you can make an informed choice that works for your life stage and financial goals.

Why Does it Make Sense to Choose Health Insurance First?

Medical costs in India are rising fast. From an introductory consultation to major surgery, expenses can run into lakhs. In such situations, health insurance becomes your first defence against unpredictable healthcare expenses.

Reasons to Make Health Insurance a Priority

Here are some key reasons why health coverage usually comes before other policies:

1. Immediate benefits

You don't have to wait years to use your policy. If you require treatment, coverage begins on the first day (except for specific waiting periods).

2. Covers rising healthcare costs

Hospital stays, diagnostics, and surgeries are becoming expensive. A proper policy cushions you from large out-of-pocket expenses.

3. Cashless network hospitals

Insurers tie up with hospitals to offer cashless treatment. You focus on recovery without worrying about payments.

4. Wellness and preventive care

Many plans today offer free health check-ups, wellness rewards, and discounts on medicines or consultations.

Who Should Prioritise Health Insurance?

Everyone. But it's even more important for:

1. Young professionals with limited savings
2. Parents with children and dependents
3. Individuals without employer-provided cover
4. Freelancers and self-employed professionals

If you're healthy today, premiums are lower. Starting early provides long-term benefits.

Understanding the Long-Term Value of Term Insurance

While health insurance covers you during unexpected medical expenses, term insurance ensures your family's financial stability in the long run. It's about ensuring your loved ones are financially stable, no matter what happens tomorrow.

What is Term Insurance?

Term insurance offers life coverage that provides financial protection for a specified period. If something happens during the policy term, your nominee receives a lump sum amount. This ensures that ongoing financial goals, such as education, loans, or daily expenses, remain unaffected.

Key Benefits of Term Insurance

Let's look at why term insurance is a solid part of any financial plan:

1. High coverage at affordable premiums

You can get large cover amounts with low premiums, especially when you start young.

2. Customisable riders

Add-ons like critical illness coverage, accidental death coverage, or waiver of premium make your policy even more valuable.

3. Supports long-term planning

If you have loans, a young family, or future responsibilities, term plans provide much-needed assurance.

4. Tax benefits

The premiums you pay can be claimed as deductions under Section 80C, and the policy payout is exempt from tax under Section 10(10D).

When Should You Choose Term Insurance?

Here's when term insurance becomes a key priority:

1. You have dependents, or you are the primary earner in your family.
2. You have taken long-term loans like home or education loans.
3. You want to secure your children's education and other future goals.
4. You're in your late 20s or 30s and want to lock in lower premium rates.

Health vs Term Insurance – Which Should Come First?

Let's put things in perspective through a simple table:

As you can see, both have different roles. One takes care of your health and finances now, and the other takes care of your family's future.

Smart Steps to Balance Both Health and Term Insurance

It's not about choosing one over the other forever. The idea is to prioritise based on your current needs and slowly build a well-rounded insurance portfolio.

Step-by-Step Approach

Here's a simple step-by-step approach to help you plan your insurance journey wisely and build balanced coverage over time.

1. Start with Health Insurance

This ensures you're not financially burdened during a medical emergency. Even a basic policy is better than none.

2. Add Term Insurance as Responsibilities Grow

Once you start earning, take on loans, or have a family to support, invest in a good-term policy. Choose coverage based on your income, liabilities, and goals.

3. Review Your Cover Every Few Years

Life changes—marriage, kids, promotions. So should your insurance. Review your policies every 3–5 years.

4. Go for Combo Policies or Riders If Needed

Some plans offer bundled options or riders that combine health and life benefits. These options may be suitable if you're seeking convenience and savings.

Things to Keep in Mind

Before making any insurance decisions, consider the following key points to ensure you select the right plan and stay well-prepared.

1. Always read the policy terms carefully.
2. Choose trusted insurers with a good claim settlement ratio.
3. Opt for digital policy management for ease.
4. Don't delay—premiums rise with age and health conditions.

You don't need to pick just one forever. Start with health insurance to secure yourself today, then add term insurance to safeguard your family's tomorrow. Both are equally important, but the timing of each depends on your stage in life.

The smart way forward? Begin small but begin now. Compare plans, understand your needs, and speak with an advisor if needed. As you grow, so should your protection.