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Personal Accident Insurance vs Term Life Insurance

Janhavi Shinde Janhavi Shinde 15 February 2017

Should you buy a personal accident cover or a term insurance? Rule out this dilemma and clear your confusion while choosing an insurance plan. Take a look at this article to ensure an uncomplicated solution.

How different is personal accident plan from term insurance

Life is unpredictable. Anything can happen at no given time. To get yourself protected financially, you purchase insurance.

But, are you juggling between investing in either a personal accident cover or a term insurance?

If yes, then let me tell you that buying either of them or both may or may not serve your purpose! To have a sound understanding, let’s talk about personal accident cover and term insurance and how they differ.

Let’s have these insurance jargons decoded right now.

Personal Accident Cover – Better Safe than Sorry!

Most of us are so busy insuring ourselves with a health or a life insurance policy for various reasons, that we almost forget the importance of personal accident cover.

Life insurance may compensate your family financially in case of the assured’s death and health insurance may pay up for hospital bills. But what about the financial loss due to accidental injury with dreading effects resulting in temporary or permanent disabilities?

So, let’s decode the meaning of personal accident cover.

A Personal Accident insurance is an insurance that covers any fatal accident or an unfortunate event restricting you from carrying your daily activities. Or to be simpler, earning your daily bread and butter. It is very important as it provides you a comprehensive coverage

Many a times, major accidents may jeopardize your long-term financial future. It doesn’t matter whether you are salaried or a businessman. Such a misfortune rendering you immobile and putting a full-stop to your flow of income is in itself problematic.

So, to be precise, if you wish to secure yourself from an unforeseen event, you should not think twice for investing in a personal accident cover. This would ensure you coverage even if you meet minor accidents.

Term Life Insurance – Secure Your Family’s Financial Future…

Someone has rightly said, “One day you’ll be just a memory for some people. Do your best to be a good one”.

In such situations, it is better we think about our family and secure their financial health and future, when we would be just a memory for them. This is when Term life insurance comes into picture.

A term insurance is a type of life insurance that you can avail for a fixed tenure. Here, premiums are paid by the insured as per the frequency chosen for fixed period of time, for which death benefits are paid out to the nominee or the beneficiary of the policy.

But, what don’t make the same mistake that our friend Rahul did a couple of years back.

Rahul had opted for a good term insurance plan after doing proper research and calculating the pros and cons of opting for a plan with a slightly higher premium. He had included the riders with the base plan.

Being the only bread-earner of the family, he had made arrangements for the financial security of his family. However, when the time came for his family to be benefitted by the plan, when Rahul passed away, they were unable to do so. Rahul had not properly informed his family members about the policy.

It is always advisable to inform the nominee about you investing in a term plan. This is because when the time comes, he/she can claim the policy for which you have been paying the premiums regularly every year.

Buying a term plan would ensure financial stability to your family in case of your untimely death. It would be solely your choice to benefit your nominee by getting a lump-sum or a monthly pay-out or a combination of both. Death is a sensitive thing and so it is better you weigh your options on all the possible parameters.

But, What’ the Difference?

By now I’m hopeful that you have a basic understanding of personal accident insurance and term life insurance.

But, what exactly is the difference between the two?

Let’s explain it this way: A term life insurance plan provides you coverage for death due to accidental or any natural cause. However a personal accident cover provides coverage for death, loss of two limbs, two eyes, one limb and one eye, loss of one limb or one eye, permanent total disability, permanent partial disability or temporary total disablement caused due to accidents only.

Personal accident cover does not consider death due to any natural reasons.

But, what is the primary factor influencing your premium in both the cases?

Here’s the answer:

Age is one of the major factor’s determining your premium for a term life insurance. However, your occupation plays a major role in determining your premium for a personal accident cover.

The risk categories are divided into 3 different types: Teachers, bankers, managers, lawyers etc. are covered in Risk Class 1. People engaged in garage machines, contractual building work, drivers of light motor vehicles etc. are covered in Class 2. People engaged in risky professions like working in mines, installing high tension wires etc. are covered in Class 3.

The difference in 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

Your Choice Matters The Most!

Now, that you have a clear understanding about the meaning as well as the difference between the two insurances, your choice is what would matter the most.

Investing in the right term life insurance would be a wise decision and should be your foremost priority in case you want to provide financial security to your family. But, if you are more focused on increasing your life insurance portfolio as well as complete coverage, then opting for a personal accident cover separately would be a good decision. The reason being that personal accident cover provides security against injuries/disabilities caused due to accidents only. Whereas, term insurance does not cover disabilities caused by accidents.

So, it is advisable to buy a term insurance plan to secure your family’s financial security and a standalone personal accident than a rider since the coverage provided is more exhaustive in nature as compared to a rider.

Remember, a personal accident cover would cover those extra edges falling apart from the umbrella of your life and health insurance policies.

Accidents are unavoidable and so is death. While an accident can impair your ability to earn, death may leave your family in a financial crisis due to loss of income. When you can take all the safety measures to prevent accidents by opting for a personal accident cover, you can certainly take on the challenges life throws on you, by investing in a good term life insurance!

If you ever have any doubts or need expert advice, you do know what to do right? Simply buzz on our toll free number 1800-209-9920 or leave a comment below. Our happy customers are already talking about us… Don’t believe it? Then take a look on

Remember: Stop running behind the crowd. Start evaluating what suits you best!

Janhavi Shinde
Written by Janhavi Shinde
Right from being a Flight Attendant to a Banker and now to a Content Writer, she has tasted success in all the fields. The kinda girl who loves pets and knows how to manage difficult people and events.