What is term insurance?
A term insurance has gained a lot of prominence in the past few years. Literally, a term insurance provides life cover for a definite period of time. If the insured person expires while the policy is in place, the nominee will receive the benefit amount.
The perks of opting for a term insurance is that it comes with the benefit of a low premium. This is because there is no maturity benefit associated with a term plan and it only comes with a death benefit. However, there are certain plans that offer a payback on the premiums if the insurance holder survives. Also, you can avail tax benefits as per Section 80C of the Income Tax Act, 1961.
What is personal accident insurance?
Personal accident insurance provides coverage against death by accident or permanent disability arising from an accident. However, personal accident insurances have not gained popularity as yet as very few insurance agents push for selling these.
However, if you are young and looking to secure your insurance portfolio, you should consider investing in a personal accident insurance policy to ensure that you are covered even if you meet minor accidents. And it is even more encouraging that in reality a personal accident insurance is really cheap, so you should not think twice before investing in one.
What is the difference between personal accident and term insurance?
A term insurance is widely different from personal accident insurance, as it provides coverage for death arising from any cause, natural or accidental. However, a personal accident insurance offers benefits only when there is death or total permanent disablement, partial permanent disablement and temporary total disablement caused by an accident. It does not take into account death caused by natural reasons.
Term Life Insurance Plans
Also, just as your age is the determining factor for the premium for your term insurance, your occupation is the deciding factor for the premium you pay for personal accident insurance. There are three risk categories: Risk Class 1 covers people who are engaged in managerial work, lawyers, teachers, bankers etc. Risk Class 2 covers people who are engaged in contractual building work, garage mechanics, drivers of light motor vehicles etc. Risk Class 3 covers people who are involved in hazardous professions like people who work in mines, people involved in the installation of high tension wires etc.
You may also like to read : The Best Age to Buy a Term Insurance Plan
Which should you invest in?
Ideally, investing in a good term insurance policy should be your foremost priority to secure the future of your family. However, if you want to secure your life insurance portfolio and ensure complete protection, then you can buy a personal accident cover additionally. This is primarily because it provides an important security against disability caused by accidents, which your life insurance policy will not cover. Your term insurance will not provide coverage for temporary total disablement or partial permanent disablement and will not pay for medical expenses, which arise out of your accident. Also, if you are involved in high-risk professions then you must consider mixing your life insurance policy with a permanent accident insurance policy to be well covered, that too at a reasonable cost.