As a salaried individual, you may have considered getting a life insurance plan or health insurance at some point in your life. But have you heard of personal accident insurance? This plan also provides coverage which is not included in either life or health plan. So, let’s understand the difference between term insurance and personal accident insurance and compare them.
Term Insurance Plan
Term insurance is a policy that provides policyholders with a life cover for a fixed tenure. In return, a set premium has to be paid regularly for a period of time. On the demise of the policyholder, the sum assured or death benefit is given to the beneficiary to secure their financial condition. You can also avail of tax benefits and claim the premiums paid towards the policy under Section 80C of the Income Tax Act, 1961. Another perk is that your beneficiary can claim the death benefit as tax-free under Section 10(10D).
Features of Term Insurance:
- Insurance riders maximize the coverage
- Affordable premium
- High sum assured
- Tax benefits under Section 80C and Section 80D
Personal Accident Insurance
Personal accident insurance covers the policyholder for personal accidents which can lead to permanent disability, temporary disability, loss of eyes or limbs, accidental death, etc. It protects the policyholder even in situations where the accident makes it difficult to earn a living. Based on the compensation for various accidents, the insured person gets the sum assured.
Features of Personal Accident Plan:
- Protection from a permanent and temporary disability, accidental death, bodily injuries, etc.
- Extra coverage that is not included in insurance plans
- Financial support to the insured person
Difference between the Two Plans
A term plan secures you from death due to accidental or natural cause, but a personal accident cover protects you from numerous situations like injury causing the loss limbs or eyes, permanent or temporary disability, etc. This cannot be covered by a life insurance policy and requires you to buy a separate plan. Also, a personal accident plan does not cover death due to natural causes.
What Should You Opt For?
The choice between the two depends completely on your requirement. If you only want a pure life cover, you can buy rider benefits to maximize your coverage. The riders in insurance protect you for unforeseen incidences like accidental death, permanent disability, critical illness and waiver of premium amongst others. Combining your term plan with various insurance riders enable you to get the most coverage. But you can also top up your term plan with a personal accident insurance plan if you want to increase your insurance portfolio and get increased coverage for accidents.
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