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December 13, 2019
Finance

Difference between Term Insurance and PersonalAccident Insurance

A life insurance plan is an essential part of your investment portfolio. It will not only secure your finances but will also provide financial support to your loved ones in case of an unfortunate incident. A term plan is a type of life insurance plan that will give your loved ones the necessary monetary coverage in your absence. Explained ahead is a detailed explanation of a term insurance plan how different it is from a personal accident insurance plan. 

What is term insurance?

Term insurance is a plan, which covers the risk of death for a specific period. If the policyholder has an unfortunate death during the tenure, the insurance company will pay the sum assured to his/her loved ones. In the case of survival, there will be no maturity benefits. This makes the term plan a pure form of life insurance cover available at an affordable cost. The terms and conditions towards the coverage are pre-determined.You will also come across many insurance providers who offer a return of the premium in lieu of which you will receive the total premium that you had paid until the maturity of the insurance policy.

What is personal accident insurance?

A personal accident insurance plan offers a specific coverage option wherein the nominees will receive benefits if the accident results in permanent disability or death of the policyholder. In such a plan, the insurance company will not consider natural causes. This is the major difference between term insurance vs. accidental insurance. 

What is better term insurance or personal accident insurance?

It is important to understand the features as well as the differences between both types of insurance plans. Before making a decision, it helps to compare personal accident insurance vs. term life insurance. A traditional term insurance plan has a protection clause against all types of death; it could be an accidental death or a natural death. In contrast, a personal accident insurance plan provides coverage in case of death caused because of an accident and it does not include any kind of natural causes. The limited protection of accident insurance comes into action here. 

In the case of a personal accident insurance cover, insurers pay the sum assured only if the insured meets with any accident, which limits the mobility of the body or renders the person disabled. This plan also covers death because of an accident. In both cases, permanent disability and death,the nominees of the policyholder will receive the sum assured. A term plan also covers this feature and is much more inclusive than a personal accident plan. It is more affordable as compared to a personal accident insurance plan and is considered as a suitable cover for individuals of all ages and income brackets.

If you have to choose between a term plan and a personal accident insurance plan, you need to ensure that you have a term plan in your portfolio as it provides a wider coverage against all kinds of death, be it natural or accidental. Such a plan will protect your loved ones when you are no longer around to look after them.

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