How Personal Accident Plan is Different from Term Insurance: Most people use insurance to financially protect themselves against life’s uncertainty. However, you may choose between different types of life insurance, such as term, endowment, money back, and personal accident covers.
Often, you may be confused about choosing a term and personal accident plan. However, before making a decision, it is important to understand these two types of insurance covers.
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Personal accident cover
It is most likely that you may have already acquired health and life insurance coverage. However, you may not have protected yourself with a personal accident cover.
Life insurance will pay your family members in case of your demise to secure their financial stability. Health plans may be beneficial in covering the hospital bills and other treatment costs. However, what happens in case you suffer from temporary or permanent disability in an accident?
Personal accident insurance is a policy that covers an accident that may prevent you from conducting your regular activities. In simple terms, personal accident protects you against financial loss due to your inability to work resulting from an accident. When you choose this policy, ensure you avail of a comprehensive coverage for maximum benefits.
Term insurance
A term insurance plan is a pure life cover available for a pre-determined period of time. If you pass away during the policy duration, your nominees will receive the benefits as per the terms and conditions.
You are able to secure the financial stability of your family in case of your sudden demise. The benefits may be paid as a lump sum or as regular payments at periodic intervals or any combination thereof. However, it is crucial that you inform your family about the coverage to ensure they receive the benefits in case of your demise.
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Difference between personal accident cover and term insurance
Now you may have a basic understanding of the two types of coverage. Here are the major differences between the two plans.
Policy benefits
A term plan will pay the policy benefits to your nominee in case of your demise during the policy term. These are available irrespective of whether you pass away naturally or in an accident.
On the other hand, a personal accident cover pays the policy benefits only in case you are involved in an accident. It covers death, permanent total or partial disability, temporary total disability, and loss of two limbs or eyes, or one eye and one limb in an accident. However, in case of your demise due to natural reasons, a personal accident cover will not pay the benefits to your nominees.
Premium
One of the most important factors that play an important role in the term insurance premium is your age. You are able to avail of a higher coverage for an affordable premium when you are younger. The cost rises as you grow older.
Apart from your age, your profession is an important consideration while determining the personal accident cover premium. If you are in a high-risk profession, such as working in mines or installing high-tension wires, you will have to pay more to avail of such coverage.
Choosing the right kind of insurance coverage is important to financially secure your family. It is recommended you choose a personal accident cover along with the term insurance for a comprehensive coverage. This is because term policies do not cover any disability caused due to an accident, which may result in a huge financial loss. It is also advisable to purchase a standalone personal accident coverage and not as a rider to enjoy maximum benefits.
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