Compare Life Insurance vs Personal Accidental Insurance
Life insurance is a type of insurance that pays out a lump sum amount when the insured person dies due to illness or disease. Accidental insurance is a type of insurance that pays out a lump sum amount when the insured person sustains an injury or incurs expenses due to an accident.
Both life and Accidental insurance provide strong financial support in case of the death of the policyholder so that the financial future of the policyholder remains unaffected. These policies make sure that your dependents can lead a decent life economically despite your death. Personal accident insurance covers claims to death due to an accident while life insurance covers claims to death in general.
Life Insurance: Life insurance is one of the most popular types of insurance and it comes in many different forms. Some people opt for term life insurance, which lasts for a specified period, while others choose permanent life insurance.
Term Insurance: Term insurance is a type of insurance policy that covers you for a certain period. It is the most common type of life insurance.
Accidental Insurance: Accidental insurance is a type of insurance policy that covers unexpected events like accidents, death, and loss. Accidental Insurance can be more affordable than life insurance because it only covers accidental injuries, such as car accidents and other incidents where medical bills are incurred.
Even though a few death-related terms and conditions of a life insurance policy and an accidental death life insurance policy are similar, the purpose of both the policies makes them quite different from each other. Read on to know about them in detail.
What is the difference between Life Insurance and Accidental Insurance?
When it comes to Life Insurance vs. Accidental Death Insurance, most of the time, these policies overlap and offer coverage for several death instances. However, these policies serve a different purpose. Let’s understand the difference between the two:
- Variety in plans offered Life Insurance has a variety of plans that covers individual requirement like death cover, short and long term financial investment goals, retirement planning solutions, etc. Accidental Insurance as the name suggests covers only accidental situations offering financial benefit to nominees.
- Death condition Life insurance provides death benefits even if you die months or years of getting a disease or illness. Accidental insurance provides benefit if you die instantly or within a specific period of an accident usually 180 days.
- Cause of death covered Life Insurance plans provides financial benefit covering all causes of death excluding suicide (which may be covered after a waiting period). Accidental death insurance provides financial benefit covering death exclusively caused due to an unforeseen and unfortunate accident.
- Partial benefit Life insurance does not give financial benefits on the partial loss of limb or sight unless you attach a rider to the base policy. Accident Insurance gives out a financial benefit if the policyholder suffers from loss of sight or limb due to an accident.
See the table below for the difference between life insurance and personal accident insurance:
||Accidental Death Insurance
||Due to Suicide (which may be covered after the waiting period).
|| Due to unforeseen and unfortunate accidents.
|| Months or Years of getting a disease or illness
||Instantly or within a specific period 180 days
||death cover, short and long term financial investment goals, retirement solutions, etc.
||Only covers financial benefit to nominees regarding accidents.
|| No, Loss of sight or limb due to an accident. (Applicable if you add Rider to the policy)
|| Loss of sight or limb due to an accident.
|| More Expensive
|| No medical coverages, only Death Benefit
||Permanent & Partial Disability, Accident dismemberment, burns, fractures, etc.
|| Standalone Policy
|| Buy it as Rider/Add-on cover with health or life insurance.
What is a Life Insurance Policy?
A life insurance policy is an investment in your future. It helps to secure your financial future by providing a lump-sum payout when you die or get sick. In return, you pay regular premiums to the insurance company throughout your lifetime. Life Insurance Policy can be used as a tax-advantaged retirement savings tool or as part of your estate planning strategy. Here are the types of life insurance policies.
Term Life Insurance Policy: Under this, life insurance is provided with life cover for a specific duration. The beneficiary receives death benefits after the policyholder’s death. Unlike whole life insurance policies, there are no maturity benefits.
Endowment Policy: Under this, a dual advantage of a life cover and savings are received by the life assured. According to this plan, the policyholder or the nominee will enjoy maturity benefits after the policy term ends. However, if the life assured dies within the policy duration, the beneficiary will be paid a sum assured along with some bonus evaluated through the years the life assured lived.
Whole Life Insurance Policy: Under this, the life assured is provided with life cover for his entire life, even if he lives up to the age of 100 years. The policyholder receives a maturity benefit after the policy duration. If the life assured dies before the term ends, the beneficiary or the nominee would be provided with death benefits.
Retirement Plan: Under this, the policyholder enjoys regular pension benefits during the vesting period, which helps attain financial stability and paves the way to income generation even after the life assured’s retirement. However, the beneficiary is provided with death benefits if the policyholder dies within the policy duration.
Children’s Life Insurance Policy: Under this, a parent can purchase a life insurance policy during childbirth which can be withdrawn when the child becomes an adult. This policy provides financial security to the children for their future goals like higher education, marriage, etc.
Money Back Policy: Under this, a percentage of sum assured at uniform intervals within the policy term-end is enjoyed by the policyholder. Furthermore, the remaining amount from the aggregate and the accumulated bonus on the plan's maturity is received by the life assured if he/she survives after the term-end. However, the nominee will be provided with the entire sum assured, overlooking the previously paid installments, if the life assured passes away within the policy term.
What is an Accidental Death Insurance Policy?
- The policy provides financial protection against any accident wherein the policyholder suffers serious injuries, blindness, loss of a limb, paralysis. In case the life assured dies, the death benefit is paid to his/her beneficiary.
- As the policy only provides accidental death cover, the payable premium is less than a standard life insurance policy. Moreover, the life assured does not have to go under any proper medical examination to avail of the accidental death insurance policy.
What is Accidental Death and Dismemberment (AD&D) Insurance?
Accidental death and disability (AD&D rider) insurance is insurance usually added as a rider to a health insurance or life insurance policy that covers the unintentional death or dismemberment of the insured. Accidental Death and Dismemberment insurance (ad&d insurance) include the loss or the loss of use of body parts or functions (e.g., limbs, speech, eyesight, and hearing).
Pay-out Comparison of Life Insurance vs Accident Death Insurance:
||Accidental Death Insurance
|Death due to overdose
|Partial loss of limb or sight
|Death due to illness or diseases
Term Insurance vs Personal Accident Insurance:
Term insurance is widely different from personal accident insurance, as it provides coverage for death arising from any cause, natural or accidental. However, 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.
Personal accident insurance may seem to be very similar to term insurance, but there are many subtle differences between term life insurance vs personal accident insurance. Let’s find out what these differences are:
|Term life vs Personal Accident
||Personal Accident Insurance
|| Covers all kinds of natural deaths.
|| Covers due to deaths or injuries caused specifically by accidents.
|| Pays out death benefits to the nominees of the insured person, in case of the Policyholder’s demise.
|| Pays out death benefits in case the insured person passes away due to an accident only.
|Major Determination of Premiums
|| Age of the insured
|| Occupation of the insured
Pricing Difference between Term Life and Personal Accident Insurance:
The risk categories are divided into 3 different types:
Risk 1: Covers Teachers, bankers, managers, lawyers, etc.
Risk 2: People engaged in garage machines, contractual building work, drivers of light motor vehicles, etc.
Risk 3: People engaged in risky professions like working in mines, installing high tension wires, etc.
The difference in high risks provided by personal accident cover and the term life insurance is reflected in pricing. This also means one more thing, “The premium for a personal accident cover is lower than buying a term life insurance”.
Accidental Death Benefit in Term Insurance:
- Accidents are one of such common causes of death, and a term plan with accidental benefit is a way to take care of that possibility financially. If the insured individual passes away in an accident, the term insurance policy pay-out will be increased if it has the accidental death benefit.
- For example, if the base coverage of the term insurance is Rs. 60 lakhs and the accidental death insurance rider coverage is Rs. 10 lakhs, the nominee of the insured will receive Rs. 70 lakhs in all in the event of death due to an accident. If not with an accident you will cover with a base amount of Rs. 60 lakhs.
Accidental Disability Benefit in Term Insurance:
A term insurance policy typically pays the sum assured only in case of the death of the insured individual, by opting for the accidental disability benefit. If the insured individual meets with an accident that leaves them permanently partially disabled, the policy will pay a percentage of the sum assured to the policyholder for the next 10 years or so.
Are Accidents covered in Term Insurance?
Yes, accidents are covered in a term insurance policy. A typical term insurance policy will pay the sum assured, irrespective of the cause of death, whether it is health-related or due to an accident.
However, the advantage of opting for the accidental death benefit rider in term insurance is that it increases the amount of money your family receives if the cause of death is an accident. This benefit can be taken with only a slight increase in the premium. Hence, it turns out to be a relatively affordable option compared to increasing the basic term insurance coverage without this rider.
How to Buy Life insurance vs Personal Accident Insurance Policy Online in India?
At PolicyBachat we cater unbiased comparison of quotes, 24*7 customer assistance team your motive is to give our customers the right quotes with compare car insurance rates online.
- Go to compare car insurance quotes online at PolicyBachat.com
- Fill in the required details.
- Click on the “START SAVING MONEY”.
- Premiums with the different life insurance companies, general insurance companies are displayed with low premiums
- Select required Add-ons/Riders and discounts, or you can Edit Policy Details as per your requirement
- Purchase best Insurance Policy using online payment
- If any queries are raised call: 1800–123–4003.
How to Renew Life insurance vs Personal Accident Insurance Online?
Insurance can be renewed online by visiting the website PolicyBachat first and then selecting a suitable insurance company. It’s worth noting that each insurance company’s renewal process may differ slightly. The following is a step-by-step guide to renewing an insurance policy online:
Step 1: log in to PolicyBachat.
Step 2: Choose a policy that is about to expire or has already expired.
Step 3: Select the coverage you require and click “Renew.”
Step 4: Read the insurance policy’s inclusions and exclusions, as well as the terms and conditions. Also, make sure to read the small print.
Step 5: Pay for the policy and receive it at your registered email address.
If you aim to provide financial safety for your family then life insurance is the right purchase. Some life insurance policies also offer accidental death benefits as a rider which can be attached to the base plan for an extra premium. The overall idea of having insurance is to have adequate financial cover at all times for you and your family, so choose your insurance cover wisely.
It would be best to purchase a plan after going through all the terms and conditions of different policies. Furthermore, you can take advice from a financial advisor or an insurance agent to estimate an appropriate value of the sum assured and the policy tenure. Log on to PolicyBachat.com or Call 1800-123-4003 for any assistance needed.