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Here's Why You Need a Personal Accident Cover Even Though You Have a Term Plan Research Team | Posted On Wednesday, July 03,2019, 04:01 PM

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Here's Why You Need a Personal Accident Cover Even Though You Have a Term Plan



It’s crucial to understand the importance of a personal accident cover, even though you have a term insurance plan. Why? Some people buy insurance products after doing research, while others just avail, without understanding the purpose. The Indian insurance market is huge in terms of scope (poor penetration) and you must avail the right insurance plan, to provide financial security to dependents.

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Here's Why You Need a Personal Accident Cover Even Though You Have a Term Plan             

Term Insurance Plan:

A term insurance policy offers coverage for a definite time frame (Term of the Plan). It offers no survival benefits if the policyholder survives the tenure of the policy. If the policyholder passes away during the policy term, the nominee gets death benefits. Term life plans are designed and offered to protect your family in case of an early demise.

See Also: What Does Accident Insurance Cover?

The term of the policy ranges from 5-30 years, but 20 years is the most popular tenure. As term insurance policies have no savings element, they are also called pure life insurance.

Merits of Term Insurance Policies

Demerits of Term Insurance Policies

The premium for term insurance policies is lower compared to other insurance policies like Endowment Plans.

They just provide death benefits, but no survival benefits.

They are an excellent option when you want to insure dependents.

The premium amount tends to increase as you grow older. A majority of insurance companies do not offer these plans to those who are in their 60s or 70s.

These policies are simple to understand and can be cancelled if required.

Around 1% of term insurance plans end in a death claim.

Personal Accident Cover:

A personal accident policy is one of the widely used insurance products in India. It insures the policyholder against death, temporary total disability, permanent partial disability and permanent total disability caused in an accident. When the policyholder expires or is declared permanently disabled in an accident, the insurer pays the sum assured and the policy gets terminated, automatically.

See Also: What Does Accident Insurance Cover?

A certain percentage of the sum assured is paid in the case of permanent partial disability (based on seriousness of the disablement). The policy can be renewed in case of temporary total disability and permanent partial disability and it pays the weekly compensation in case of temporary total disability. It is worth considering that personal accident policies are availed as add-ons under health, motor and life insurance policies.

Major Inclusions of Personal Accident Policies

Major Exclusions of Personal Accident Policies

Life support benefit


Accidental death

Influence of intoxicants

Daily allowances

Natural death

Accidental dismemberments

Injuries or pre-existing disabilities

Support for child education

Participating in sports/adventures activities

Partial/permanent total disability

Self-inflicted injuries

Hospitalization overheads

Mental orders

Why Do You Need a Personal Accident Policy in Addition to a Term Insurance Plan?

In India, approximately 1,214 road accidents are reported each day. In the year 2017, the number of road accidents reported was 4.64 Lakh. The number is still growing. These alarming statistics clearly indicate the relevance of buying an exclusive personal accident policy, which offers significant benefits over a term insurance policy as discussed above.

While minor accidents temporarily injure, major accidents have a large impact on your life. You need a personal accident plan to safeguard against unexpected accidents. Just imagine a situation where you are hit by a vehicle and are permanently disabled.

See Also: Benefits of Personal Accident Insurance

You have no monthly income, but have EMIs to pay and living and medical expenses to manage. Under such circumstances, personal accident policies come to your rescue. Put simply, term insurance plans do not extend financial security in case of temporary total disability, permanent partial disability and permanent total disability caused in an accident, but personal accident policies do.

Final Word

A term insurance plan assures financial protection in case of natural and accidental death, whereas an accident policy provides financial security in case of both major and minor injuries in an accident along with death in an accident. Accidents can happen any time and therefore, it is important to be financially safe.  Consider availing a term insurance plan along with a personal accident rider or a standalone accident plan to safeguard yourself and family.

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