Personal Accident and Term Insurance decoded

Term insurance has garnered importance in recent times as it is a policy which provides a life cover for a definite period of time and benefits the nominee of the deceased policy holder in case of his/her death. The positive aspect of a term policy is that the investment required is low.

A personal accident insurance presents coverage for death caused by accident or a permanent disability due to an accident. But it is evident that this policy has not been a favourite among policy holders as lesser insurance agents promote it. The policy comes at a cheaper price and is perfect for young individuals who are looking at building their insurance portfolio, while also covering minor accidents.

So, what’s the difference between a term insurance and a personal accident insurance?

While a term insurance offers a coverage for death due to accidental or a natural cause, a personal accident insurance provides benefits only when there is death or permanent total disablement, temporary disablement or a partial permanent disablement caused by an accident. It does not take into consideration death caused by natural reasons. Also, while a personal accident insurance determines the premium according to an individual’s age, it is also classified into 3 risk categories depending on the kind of occupation the individual is engaged in.

Thus, it is wise to take into consideration all your needs and consult an insurance expert before choosing a policy.