Any individual of age between 18 years and 65 years can opt for a term insurance policy whenever they need it.
Difference between Personal Accident Insurance and Term Insurance Explained
A term insurance policy provides a death benefit, which means that if any unfortunate incident happens to the insured person, the sum assured will be issued to the nominee. On the other hand, in case of a personal accident insurance plan, the insurer will pay the sum assured only if the insured individual is severely injured or passes away in an accident.
Since some of the premises of these policies overlap, there is a confusion that often develops among them. However, both of them have some important differences. Keep reading to learn more about personal accident insurance vs. term insurance plans.
What Is a Term Insurance Plan?
A term insurance is a life insurance policy providing financial coverage to a policyholder wherein the 'term' of the policy and sum assured is chosen by the policy owner. It is called so since this insurance policy gives a predetermined period of coverage.
You can purchase a term life insurance plan to provide financial protection to your loved ones in your absence. This means even after you suddenly leave for your heavenly abode, your family can maintain a normal lifestyle.
What Is a Personal Accident Insurance Plan?
A Personal Accident Insurance plan is quite different from a term life insurance policy. This insurance plan offers financial coverage to the nominee of the insured person in case of the latter's sudden death due to an accident, accidental injuries, temporary or permanent disabilities, partial or complete disabilities, etc. The personal accident insurance policy also covers accidental disabilities like loss of limbs, eyes, and speech.
A personal accident insurance plan acts as an income protection, wherein the maximum coverage limit and rate of premiums depend on your income and profession.
What Are the Differences Between Personal Accident Insurance and Term Insurance Plans?
Following are the key differences between personal accident insurance and term insurance policies:
Term Insurance Plan
Personal Accident Insurance Plan
A term insurance policy can last for 10 years, 20 years, or more.
The tenure of a personal accident insurance policy is one year.
There is no need to renew a term insurance plan.
Personal accident insurance plans must be renewed every year for continued coverage.
The maximum amount of coverage is up to 20 times of your yearly income.
The maximum coverage amount is usually 10 times of your yearly income.
The basic term plan does not include any disability cover, but riders like accidental and disability covers can be added.
The major covers of a personal accident insurance plan are accidental death and disability.
Benefit Distribution Mode
In a term insurance plan, the sum assured is claimed as a monthly income, lump sum, or combining both.
In a personal accident coverage plan, the sum assured is claimed as a lump sum amount only.
Term insurance plans provide coverage against natural death. That means, if the life insured dies in an accident, no compensation will be given under the basic term plan.
A personal accident insurance policy offers coverage only for accidental death or disability.
The beneficiary gets the insurance money in the event of the insured individual’s death.
In a personal accident insurance plan, if an insured person gets injured in an accident, the medicinal treatment charges can be claimed as per the policy.
What Are the Types of Term Insurance Plans?
1. Level Term Insurance PlanThe level term plans are the most popular type of term insurance policy that provides a fixed assured sum to the nominee of the policy holder in case of the unexpected demise of the insured individual. However, if the insured person survives the policy term, no compensation will be paid. This insurance plan offers reasonable premiums, and it relies on the insured person’s age, policy tenure, lifestyle habits, and mode of premium payment.
2. Increasing Term Insurance PlanIn an increasing term policy, the amount of sum assured increases annually by a particular proportion. Moreover, the premium rates of the policy increase over time due to the increase in the insurance money.
3. Decreasing Term Insurance PlanPrecisely, a decreasing term insurance policy is the exact opposite of an increasing term insurance policy. As per this policy, the amount of sum assured reduces by a particular percentage on a yearly basis. As a result, the rate of premium of the policy also starts shrinking over time.
4. Term Insurance With Return of Premium PlanThe basic term life insurance policy only provides death benefits and no survival benefits. However, if term insurance is clubbed with return of premium, then an insured individual will get back the entire premium amount paid as survival or maturity benefits if they stay alive till the end of tenure.
What Are the Types of Personal Accident Insurance Plans?
1. Individual Accident InsuranceIn an individual accident insurance policy, a policyholder gets compensation for any unforeseen accidental body injury, temporary or permanent disability, loss of eyesight or limbs, or even accidental demise.
2. Group Accident Insurance
Another type of personal accident insurance plan is group accident insurance. In general, this insurance policy is taken by the employers of many organisations to provide coverage to their employees. This insurance plan comes with a discount on premium amounts based on the group size.
Group accident insurance is a good incentive for small-scale enterprises since it is obtainable at a reasonable cost. However, this insurance policy is comparatively less efficient than an individual plan as it has limited advantages.
3. Child Personal Accident Cover
Often, children are prone to unforeseen accidents. A child personal accident cover guarantees that your child is effectively protected against accidents and injuries. This plan comes with a substantial amount of insurance and provides coverage for medical expenses as well as temporary or permanent disabilities.
After going through the explanation and types of term insurance and personal accident insurance policy, take a look at their differences
Steps to Apply for a Term Life Insurance Plan
Mentioned below are the easy steps by which you can purchase a term life insurance plan online:
Step 1: Visit a trustworthy insurance provider
Step 2: Take a look at the different term insurance plans the insurer offers
Step 3: After choosing the term insurance plan that suits you the best, proceed to its online application process.
Step 4: Fill out the term insurance application form online
Step 5: Attach the necessary documents specified by the insurance provider
Step 6: After completing these formalities, click on the 'Submit’ option and go to premium payment online.
Upon completion of all these steps, your insurer will thoroughly verify your application form and the attached documents. Subsequently, after successful verification, you will receive the policy documents by email.
After you have gone through the steps to apply for a term insurance plan online, take a look at the steps to claim a personal accident insurance policy.
Steps to Buy a Personal Accident Insurance
The following are the steps to buy a personal accident insurance plan online:
Step 1: Fetch a reliable insurance provider
Step 2: Go to the ‘buy online’ option and then navigate to the ‘personal accident insurance’
Step 3: Compare the offers and choose a plan that suits you the best.
Step 4: Select the ‘calculate premium’ option from where you can get the detailed premium value of the plan. If the displayed premium seems reasonable, select ‘proceed’.
Step 5: After this, you have to enter your personal details like name, mobile number, email ID, address, etc.
Step 6: After doing this, you have to fill out the application form and correctly mention the name of the individual stated in the policy.
Step 7: Thoroughly cross check the details you have entered and click on the ‘mode of payment’ option and choose your preferred payment option.
Step 8: Click on ‘Submit’
Upon completion, your application for buying a personal accident insurance plan will be submitted successfully.
Now you should have a detailed idea about personal accident insurance vs. term insurance plans. Hopefully, this will help you to buy your appropriate term insurance and claim personal accident insurance. However, make sure to go through the terms and conditions of insurance policies minutely since they differ from insurer to insurer.
FAQs about Personal Accident Insurance vs. Term Insurance
Personal accident insurance cover does not provide any coverage for intentional injuries, injuries due to alcohol or drugs, wounds caused due to war, AIDS or HIV, past illnesses, injuries due to sports, etc.
The minimum age limit for the personal accident insurance policy is 18 years, and the maximum age limit is 65 years.
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- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.