The Difference Between Health Insurance & Medical Loan | Kotak Mahindra Bank - Personal Loan Stories
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21 JUNE, 2022

Medical emergencies can happen at any time. They can be as small as a cut or as big as a heart attack. The point is, you never know when they will happen and when you need to pay for them. Typically, you do not have much choice other than paying the hospital bill as required, irrespective of your financial condition. Yes, you can rely on your savings to pay for them when it happens. However, it is no secret that medical bills can go up to lakhs of rupees draining all your savings. To avoid such a situation, some people rely on health insurance and many opt for medical loans. But the choice between the two can be confusing. What is better, health insurance or a medical loan? Let’s find out.


What is a medical loan?

A medical loan is a personal loan that you can avail to fund the various expenses during a medical emergency. You can avail a medical loan from a bank or financial institution at affordable interest rates. With medical loans, you have the facility of repaying the loan at flexible tenures at a comfortable EMI. Moreover, you need not furnish any collateral, security or guarantee to avail a medical loan.


What is health insurance?

Health insurance is an insurance policy that covers a part or the entire expenses of your health-related emergency and its hospitalisation expenses. When you have health insurance, you can pay the expenses and claim reimbursement from the insurance company. Or the insurance company can directly pay the hospital or clinic.

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Difference between a medical loan and health insurance



Medical loan

Health Insurance


You avail medical loan when you need funds to pay the expenses of an unexpected illness.

You avail health insurance as a precautionary measure to prepare for a medical contingency.


Medical loans have no end use. You can use the funds for any purpose, be it for therapy, medicines, surgery, hospitalisation cost, etc.

Health insurance can have restrictions based on type of insurance and sum insured. For example, you might not be able to claim insurance for all types of illness and at all hospitals.

Waiting period

No waiting period. You can use the loan amount for medical expenses immediately.

Has a fixed waiting period. You might need to wait for a few years before you can claim the insurance amount for treatments.


You opt for a medical loan only when necessary as per your need and financial requirement.

Health insurance needs to be renewed annually whether you claim it or not. If you do not pay the premium in any year, you might not be able to claim it when needed.

Medical condition

The eligibility of a medical emergency loan is not dependent on your current health. You can avail a medical loan even if you are suffering from any critical illness.

If you are suffering from a critical illness or have undergone any major surgery, you might not be able to avail health insurance.


While health insurance can be helpful for cashless hospitalisation when the need arises, it cannot be relied upon due to its various limitations. A online personal loan for medical reasons can be helpful when you need immediate funds for medical expenses. Its application process is simple and you can get funds in a few hours.


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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.