A surprisingly large number of Indians have health insurance through their employer and consider themselves "covered." It's a reasonable instinct — but health insurance and life insurance solve completely different problems, and having one without the other leaves a major gap.
Health insurance pays for medical treatment while you're alive — hospitalisation, surgery, ICU stays, chemotherapy. It prevents your savings from being wiped out by a medical event. It is essential. But it has zero benefit to your family if you die.
Life insurance pays a lump sum to your family when you die. It doesn't cover any medical costs. It has no function while you're alive and healthy (for term plans). But for your family, it's the difference between financial stability and financial crisis after you're gone.
The confusion arises because some products — like ULIPs and savings plans — blend insurance with investment. But even these don't replace health coverage. And the critical illness rider on a term plan, while it provides a lump sum on certain diagnoses, is not a substitute for a proper health insurance policy that covers hospitalisation.
The right financial foundation for any Indian family with dependents: a comprehensive health insurance policy (₹10–20 lakh family floater) plus a term life insurance policy sized to your income and liabilities. Together, they cover the two biggest financial risks your family faces.