New Delhi, Sept. 7 -- When money is tight, many people face a common personal finance dilemma about if they should build an emergency fund first or spend on health insurance. Financial planners say the two serve different purposes and should not be treated as competing financial goals.

For someone starting with limited savings, the practical approach is to buy adequate health insurance first and build an emergency corpus alongside it, said Anooj Mehta, Partner at 1 Finance.

"The decision for Emergency Fund or Health Insurance is not a choice one should make over another, these go parallel," Mehta said.

For example, a healthy 35-year-old may pay around Rs.12,000- Rs.15,000 a year for a Rs.10 lakh individual health insurance cover, accor...