Life Term Insurance Vs Accidental Death Insurance Policy

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Term Life Insurance vs. Accidental Death Insurance

Term Insurance Quote
  • 9th Oct 2019
  • 4,272

Term Life Insurance vs. Accidental Death Insurance

India has seen an increase in life insurance penetration over the last few years. Life insurance plans not only offer life coverage but help you achieve several financial goals.

There are different types of life insurance plans as follows:

  • Endowment policy
  • Such policies have a fixed term and help you earn returns on investment. The policy provides a death benefit as well as maturity benefits.

  • Term insurance
  • It is a pure life cover and pays your nominees policy benefits in case an unfortunate incident takes place during the term.

  • Money-back policies
  • Another type of life insurance plan is a money-back policy that provides periodic returns at pre-determined intervals.

  • Whole life plans
  • The policy continues until you pay the premium and has no fixed term. The maturity age is generally 100 years and if you survive beyond this age, you receive matured endowment coverage.

  • Children’s plans
  • Insurers offer different types of children’s plans to plan future fund flows to achieve various financial goals.

  • Annuity plans
  • Such policies provide you with financial freedom post-retirement and cover loss of income during these years.

  • Accidental death insurance
  • An accidental death insurance policy offers protection to you and your family in case of severe injuries or death in anaccident. Policy benefits are available in case of loss of limb or vision, or if you are paralyzed in an accident. These plans do not provide cover for high-risk adventure activities such as motor racing and skydiving.

An accident insurance cover is available without medical tests. Additionally, the premium is lesser as limited coverage is available under the policy.

Often, there may be some confusion between traditional life insurance and accident policies.

Differences between accidental death and dismemberment vs. life insurance policies:

1.Cause of death covered

Traditional life insurance covers death due to all causes excluding suicide. Accident policy pays the benefits only in case of injuries or death in an unforeseen accident.

2.Death condition

A regular life insurance policy pays the death benefits irrespective of when the policyholder passes away since the date of diagnosis. On the other hand, accidental death benefits are available only in case the accident happens within the specified period (usually 180 days).

3. Variety in plans offered

Another difference between life insurance vs. accidental death insurance is the availability of options. The former provides multiple options to suit individual requirements such as retirement, meeting financial goals,and death cover. The latter covers only loss resulting due to an accident.

4. Partial benefit

If you want to include covers like partial loss of sight or limb under a regular life plan, you need to pay an extra premium to avail of riders. In comparison, an accident plan provides such benefits without any additional cost.

Having understood the differences between life insurance vs. accidental death, here is a comparison of the payout under these two types of covers:

Life insurance policy Accidental death policy
Death due to overdose No No
Partial loss of limb or sight No Yes
Accidental death Yes Yes
Death due to illness or diseases Yes No

When you want to understand what is life insurance, it is important to note the inclusions and exclusions. For example, the policyholder’s nomineesmay not receive any benefits in case of death due to an accident. Moreover, the beneficiaries need to prove that death was the direct result of an accident.Therefore, you must be well-versed with the inclusions and exclusions before choosing a suitable insurance plan.

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- A Consumer Education Initiative series by Kotak Life

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