Accidental Term Insurance

It is a rider benefit that can be availed at an additional premium.

Accidental Term Insurance: An Overview

Since term insurance is a simple policy, unlike life insurance, a person can have added benefits or added monetary relief with the help of riders. To provide additional cover to a person in case of an accident, one can purchase an Accidental Death Benefit rider. This article is all about Accidental Term Insurance and its benefits. Read along!

What is Term Insurance with Accidental Benefits?

Life is unpredictable and to protect one’s family under a financial umbrella, a person purchases term insurance. Accidental Term Insurance provides an additional monetary relief over the base insurance. A person with term insurance is covered against any death wherein the nominee is paid the death benefit or the Sum Assured as a lump sum amount or part lump sum and part monthly income, as the life insured chose while purchasing the policy.

Unlike the term insurance, Accidental Term Insurance, with accidental death benefit rider, provides an additional amount to the nominee along with the base amount. For example, if a person has a Sum Assured of Rs 45 lakh on the base policy, a person can add the accidental death benefit rider and increase the Sum Assured. If the rider has a sum assured of 20 lakh, the Sum Assured that the nominee would receive in the event of the demise of the life insured due to accident will be 65 lakh. If the person dies due to other reasons than an accident, the nominee is paid only the base Sum Assured as per the policy.

The person is also required to pay additional premiums for the rider if opted for. Accidental Term Insurance and regular term insurance offers no benefits on the maturity of the policy. Although some insurance companies offer maturity benefits, these are called Return of Premium policies (TROP or ROP). These plans, too, can have accidental death benefit rider.

How is it Different from Pure Term Insurance?

Pure term insurance is void of maturity benefits. If the life insured survives the policy’s tenure, the person is not entitled to returns of the premiums. If the life insured passes away, a pre-defined amount of Sum Assured shall be paid out to the nominee. Even though it has no maturity benefit, there are loads of other benefits offered on term insurance. A person, whether a sole earner or an individual beginning to start a family, should consider purchasing some sort of insurance like term insurance, or term insurance with a return of premium.

Though term insurance have limited benefits, term insurance can be made solid with the addition of rider protection. These riders offer protection against various circumstances. Accidental death benefit policy covers the insured against accidental disability and permanent disability, etc., Pure term insurances have lower premiums compared to other insurance plans. With the addition of riders, one has to pay additional premiums for the added benefits. 

Features of the Accidental Term Insurance

Accidental Term Insurance has a host of benefits and features. This sort of policy is mainly advised for the people who work in conditions where they are constantly surrounded by danger. Some of the features of the policy are as follows:

• Surrendering the Policy: Like term insurance, the insurance companies offer a person to surrender the policy if need be. From the onset of the policy tenure till a period of 5 years, if a person chooses to surrender the policy, a surrender charge could be levied on the life insured. Not all companies levy charges. Some do, and some don't.
• Revival of the Policy: A person can also revive the policy within a period of 5 years from the last date of unpaid dues, provided a person has to pay interest on the premiums. To revive the policy, one has to pay interest on the unpaid premiums and give a written request to revive the policy or an undertaking to the company.
• Tax Benefits: A person can also avail of tax benefits under the existing Income Tax rules. Under Section 10(D) and 80(C), one can opt for some tax benefits.
• Return of Premiums: If one opts for accidental term insurance with the return of premiums, the premiums will be returned to the policyholder upon surviving the term of the policy.  Features of each term insurance vary from various companies. Some may offer TROP plans, and some may not.

Benefits of the Accidental Term Insurance

The perks of accidental term insurance are numerous. Apart from having high Sum assured values, these policies also have multiple death benefit options, various additional riders, critical illness coverage, return of premium option, income tax benefits, and accidental death benefit as suggested in the name. to mention a few are:

• Lower Premiums: One of the salient features is that the insurance has low premiums. The premiums could be as low as Rs 2500 plus taxes. Companies also offer different premiums based on whether a person is an active smoker or not. As a result, smokers often have lesser Sum Assured values compared to their counterparts.
• Various Payout Options: With different Sum Assured values, there are different payout options available for the nominees. 
  • The nominee can have a lump sum payout wherein the complete Sum Assured value will be paid out at once. 
  • With a monthly income payout, the nominee will receive a set amount of funds each month till a specified date or age. 
  • If the policyholder wills, he can opt for a part monthly part lump sum payout option wherein half of the Sum Assured will be paid immediately, and another half will result in monthly income.
• Tax Benefits: People can also avail of tax benefits under specific provisions of the Income Tax Act, 1961. Under the provision of Section 80C, the taxes on the premiums a person pays are exempt of up to Rs 1.5lakh per year. Maximum term insurance benefits could be availed if the maximum cover is opted for based on the age and health of the person. Under Section 10D, the death benefit of the term insurance is fully exempt. (*Tax benefits are subject to change as per the prevailing income tax laws. Standard T&C apply.)
• Riders: With the option to purchase additional riders, one can protect the family with higher cover. Accidental Term Insurance is one such term insurance with an additional rider covering a person's family with monetary relief from a death due to an accident.  

What is Not Covered

Under the policy, there are certain exclusions that a person must be aware of. These are usually mentioned to the customers before purchasing the policy, but it is crucial that a person digs deep and knows well about the exclusions. Some of the exclusions are as follows: 

No death benefits are paid out in case:

• Death occurs due to an accident under the influence of liquor 
• Death occurs due to an existing health issue unless additional rider protection is opted for
• Death due to overdose of psychedelic substances
• In some instances, if death occurs due to complications during childbirth and pregnancy
• Any death occurring due to participation in illegal activities
• If the person commits suicide

Eligibility Criteria to Buy Accidental Term Insurance

The minimum age at entry for term insurance is 18 years, and a maximum could be anywhere between 55 or 65 years. To purchase a policy, the person must already be working and earning some sort of income. He/she should be a citizen of India to purchase accidental term insurance in India. PIOs and NRIs too can purchase term insurance in India these days.

Documents Required for Buying

To purchase the accidental term insurance, one must submit a predefined set of documents for file keeping. These are called the Officially Validated Documents (OVDs). These documents conform to the KYC norms, and a person is mandated to submit the same. Failing to provide either one of these will nullify the insurance if already in force. The documents required are as follows: 

• Identity Proof
• Address proof
• Bank statement
• Passport-sized photograph
• Proposal form

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