If you are trying to get an insurance policy for the first time, then it is easy to be confused between a term plan and an accidental insurance policy. After all, the goal of both these policies is to get your family the kind of financial security that lets them live comfortably in your absence. However, there are several major differences between these two types of insurance cover. It is important to know these differences before you put your money into any of the two options. So, here you go!
The tenure
When you calculate term insurance premium carefully, your policy can have a long tenure of ten to twenty years or more.
On the other hand, personal accidental insurance has a shorter tenure of a year. So, you need to keep renewing the cover each year to continue enjoying the benefit.
The coverage
Though the coverage depends on the term insurance quote given to you by the insurer, it is typically more than what you get for accidental insurance. The highest coverage for a term policy is twenty times the policyholder’s yearly income. In accidental insurance, you can only get a cover that is ten times the annual income.
The risk factor
Term policies come with death benefits, i.e., the beneficiary gets the benefit amount in the policyholder’s untimely demise. A pure-term insurance plan that does not have any additional riders only covers you for the death arising from a natural cause.
As you can guess from the name, an accidental insurance cover offers benefits only for deaths that are caused due to accidents. In fact, even if a person gets injured in an accident, they can make a claim to pay off the medical bills. However, the beneficiary cannot make a claim if the policyholder dies due to natural causes.
The riders
In a term policy, the accidental and disability covers can be included as riders. Such riders tend to increase the premium amount to some extent, though they help the policyholder to get more coverage. On the other hand, accidental death and disability are the primary covers that you get under accidental insurance.
The benefit distribution
In case of the policyholder’s demise, the beneficiary can receive the sum assured as a monthly income or a lump sum. Additionally, they can get a part of the sum assured as a lump sum amount while getting monthly income from the remaining amount.
For accidental insurance, there is no provision for monthly payouts. The sum assured can only be received as a one-time lump sum payment.
The bottom line
It would be wrong to say that getting a term plan is better than accidental insurance. In fact, if you want to protect your family completely from financial distress, then why don’t you get both term and accidental insurance?
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