Life is full of surprises. Some of the best surprises are like when suddenly rain comes on a hot day or a friend gifts you. However, a few surprises can be a bit difficult. Since we cannot predict what will happen in the future, we try to find ways to care for and safeguard our loved ones. In India, term insurance and personal accident insurance are two commonly used ways.
People often get confused by these terms. You might think, "Should I get both? Which one is better for my family?"
Here we simplify the differences between these two forms of insurance, which should help you in deciding the best one for your life.
Term Insurance can be thought of as pure "life cover." It is a totally straightforward type of insurance. When you purchase a term plan, you pay the insurance company a small amount of money (called a premium) each year. In return, the company agrees to pay a huge amount of money to your family if you no longer live.
Lots of folks keep searching for "Best term plan in India" because it can provide a very high amount of coverage for a low price. Even if the breadwinner of the family is no more, with a term insurance policy, the children can continue their schooling, and the family can maintain their standard of living. It is a truly unselfish gift because you don't receive the money; it's your family who gets it.
Term insurance generally provides coverage for death from almost any cause, such as illness or old age, but personal accident insurance is quite different. It basically aims at assisting you in case you meet with a grave accident.
Accidents do not necessarily cause deaths. They may also cause disabilities, which may restrict the sufferer's ability to work. Interestingly, this is a very low-cost insurance option and is typically less expensive than a term plan. What is more, it can also pay the amount directly to you in case you become disabled or severely injured. It only covers death due to accident, loss of limbs, and loss of sight.
Reflecting on how these two different instruments work in the real world could be a good idea. The primary function of term insurance is to help your family financially in case of your demise, whatever the cause may be, whether old age, a sudden heart attack, or illness. Whereas a personal accident policy is a vehicle to keep both you and your family financially afloat immediately after an accident.
While with a term plan, a payout takes place only in the event of the death of the person, an accident plan offers more flexibility. It can pay the benefit if you survive but are unable to work due to a permanent disability. Since the accident insurance covers a relatively smaller range of risks, the price is generally lower than a standard life cover policy.
That's actually the main question. The fact is, they both play quite different "protection" roles in your life.
If you're basically the breadwinner of your household, then taking a term plan should be your first and foremost step. Heart attacks or respiratory problems are examples of common diseases that we hear about every day. A term insurance plan would take care of the financial consequences of these health risks.
Not having one might put your family in a really tough situation financially, especially when it comes to paying monthly bills or loans, in case of your absence. So really, choosing the best term plan in India basically means finding a business that you can rely on to look after your spouse and children.
Indian roads are notorious for being congested and unpredictable. Even if you happen to be a super careful driver, there's always a chance of an accident happening. That's the reason why a personal accident insurance policy is essential, as it covers you during your lifetime, whereas other forms of insurance protect you after death.
For example, if due to a physical injury that you have sustained in an accident, you are incapacitated and unable to work for a period of six months, this insurance policy will be of your assistance while you are recuperating.
Sure! Actually, the majority of financial advisors recommend having both. Many folks get a term policy first and then add an "Accidental Death Benefit" rider. It's like a little extra layer of protection. Suppose you have a 50 Lakh term insurance plan and a 20 Lakh accident rider, and you unfortunately die in an accident; your family will receive 70 Lakh in total.
On top of that, purchasing a standalone personal accident insurance policy may be a wiser option because it covers "disability." Typically, a term plan only provides a payout upon death. So if you survive with injuries, your term plan will remain silent, whereas your accident plan will step in and provide assistance.
Follow these three easy steps to make the right choice for you:
Check the Claim Ratio: It's a good idea to see which companies have a high "Claim Settlement Ratio"; that's simply a way of telling you how often insurance companies pay out claims.
Have a Look at the "Exclusions": These are things that the company is not going to pay for. For example, most accident insurance plans will not cover you if the accident happened when you were driving dangerously or were breaking the law.
Act Fast: Insurance rates are based on how young and healthy you are. The older you get, the higher the price.
Life is a wonderful journey, and being prepared can make it a lot easier for you. Term insurance is the way you reassure your family that they will be taken care of no matter what. Personal accident insurance is a financial backup plan that can help cover unexpected disruptions in your income.
It's like when you wear a helmet and a raincoat. A helmet is worn to protect the head in case of a fall (Accident Insurance), whereas a raincoat is to prevent you from getting drenched (Term Insurance). Both are protective in different ways. Why don't you take a few minutes today to think about your savings and your family's needs? Getting yourself insured is definitely a major act of kindness that you can do for yourself and your loved ones.