Digit Glow Term Life Insurance
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1 Crore coverage starting at just ₹1,309*
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Same-day issuance for healthy individuals
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Difference Between Term Insurance and Personal Accident Insurance
Personal Accident Insurance and Term Insurance are both types of life insurance policies, but they serve distinct purposes and offer different benefits. While both are designed to provide financial protection for your loved ones in the event of your untimely death, they differ significantly in their coverage and scope.
Personal Accident Insurance focuses on accidental injuries, while Term Insurance provides a pure death benefit. The best choice for you depends on your specific needs, lifestyle, and budget. Keep reading to learn more about term insurance vs. personal accident insurance plans.
Table of Contents
What is a Term Insurance?
A term insurance plan is a type of life insurance policy that provides coverage for a specified period, or “term” of the policy and the sum assured is chosen by the policyholder. If the insured person passes away during this term, the policy pays a death benefit to the beneficiaries.
It's designed to offer substantial coverage at a lower cost to financial protection for your loved ones in the event of your untimely death, ensuring they can cover living expenses and debts to maintain their standard of living.
What is a Personal Accident Insurance?
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.
Difference Between Personal Accident Insurance and Term Insurance
Following are the key differences between personal accident insurance and term insurance policies:
What are the Types of Term Insurance Plans?
1. Level Term Insurance Plan
The level term plans are the most popular type of term insurance policy that provides a fixed assured sum to the nominee of the policyholder 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 Plan
In 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 Plan
Precisely, 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 Plan
The 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 Insurance
In 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.
How to Buy for a Term Life Insurance Plan?
Step 1
Research and compare plans, features, premium options, and policy terms.
Step 2
Complete the online application form by adding your personal, financial, and nominee information.
Step 3
Upload essential documents such as identification, address proof, and income verification.
Step 4
Include any additional riders or add-ons needed for your policy.
Step 5
Make the premium payment online via debit/credit card or net banking
How to Buy a Personal Accident Insurance?
Step 1
Compare and find a reliable insurance provider.
Step 2
Select “buy online” for personal accident insurance.
Step 3
Calculate the premium and proceed if it looks good.
Step 4
Enter your details like name, mobile number, email ID, address, etc.
Step 5
Fill out the application, review everything, choose a payment method, and submit.
When to Choose Term Insurance?
Limited Budget
Term insurance is generally more affordable than permanent life insurance, making it an excellent choice for those with a tight budget but still needing substantial coverage.Temporary Coverage Needs
If you have financial obligations that will decrease or end over time, such as a mortgage or the cost of raising children, term insurance can provide coverage during those critical years.Coverage for a Specific Goal
If you want to ensure that a particular debt is paid off or that there is funding for a specific goal (like children's education) in the event of your untimely death, term insurance can be tailored to meet these needs.Supplementing Permanent Insurance
For those who already have a permanent life insurance policy but need additional coverage temporarily (due to increased financial responsibilities), term insurance can be a cost-effective solution.Business Obligations
Business owners or partners may opt for term insurance to cover specific business-related financial risks, such as the tenure of a business loan or to fund a buy-sell agreement.When to Choose Personal Accident Insurance?
High-Risk Occupations or Hobbies
If you work in a high-risk profession where the likelihood of accidents is higher, such as construction, mining, or certain types of manufacturing, personal accident insurance can offer peace of mind and financial protection.Lack of Comprehensive Health Insurance
If your current health insurance policy doesn't cover all the expenses related to accidents, such as hospitalisation, surgery, or rehabilitation costs, personal accident insurance can provide additional coverage.Active Lifestyle
For those who engage in adventurous activities or sports that increase the risk of injury, personal accident insurance can be a wise choice to cover potential medical expenses and loss of income during recovery.Financial Security for Dependents
If you have dependents who rely on your income, personal accident insurance can ensure they are financially supported in case you suddenly become unable to work due to an accident.Complementary Coverage
Even if you have a good health insurance plan and work in a low-risk job, accidents can happen anywhere, from home to public places. Personal accident insurance serves as an additional layer of financial protection.Which is Better Personal Accident or Term Insurance?
Coverage Scope
Term insurance provides comprehensive coverage, including both accidental deaths and natural causes of death. In contrast, personal accident insurance is specifically designed to cover accidents only. This means if the policyholder dies due to natural causes, personal accident insurance won't provide any payout.Beneficiary Payouts
With term insurance, if the policyholder passes away, the nominated beneficiaries receive death benefits, ensuring financial support for the family. Personal accident insurance, however, only offers compensation if the policyholder's death results from an accident. It's crucial to note that term insurance supports families in a broader range of unfortunate events.Cost-Effectiveness
Term plans are generally more affordable than many other insurance types, offering significant financial protection at a lower cost. This affordability makes term insurance an attractive option for securing your family's financial future without a hefty premium.FAQs about Personal Accident Insurance Vs Term Insurance
What is the age limit required to opt for a term life insurance plan?
What is not covered under a Personal Accident Policy?
What is the age limit of personal accident insurance?
What sets term insurance and personal accident insurance apart from offering death benefits?
What is group term life insurance vs group personal accident insurance?
What is the difference between term insurance and accident insurance?
Term Life Insurance Provides financial protection for a specified period and pays beneficiaries a tax-free lump sum death benefit if you pass away during the term. The best part is that it is often more budget-friendly.
Accidental insurance is extra coverage that helps if you get hurt or die because of an accident. It can give money for disability and accidental death (like from car accidents or falls) and excludes covers for natural causes.
What is accidental death coverage in term insurance?
What is the minimum coverage for Personal Accident Insurance?
What are the terms and conditions of personal accident insurance?
Personal accident insurance terms and conditions typically include:
- Age limit: 18-65 years
- Policy term: 1-5 years
- Inclusion: Accidental death, disability and medical expenses coverage
- Exclusion: Suicide, self-inflicted injuries, war, terrorism, etc.
- Waiting period: 30 days to 1 year
- Grace period for premium payment: 15-30 days
- Renewability: up to age 70
Is personal accident coverage mandatory in the term insurance?
What is the cover period for personal accidents?
What is not covered in personal accidents?
Can a person have two personal accident insurance?
What happens if a person has two personal accident policies? Can he claim accidental death benefits from both policies?
What is the age limit for personal accident coverage?
What are the two main types of personal accident insurance policies?
Should I take accident cover with term insurance?
What if I start drinking or smoking after taking term insurance?
What is the cost of personal accident cover?
Who should take personal accident cover?
Other Important Term Insurance Guides
Other Important Articles Related to Term Insurance
Disclaimer
- 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.
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