While buying an insurance cover, you may feel confused about what type of policy you must have in your portfolio to ensure complete financial security for your family. If you are wondering whether to purchase a term insurance policy or a personal accidental plan, you must know that both policies serve specific purposes. Understanding the differences between the two can help you decide if you must use either of these insurance policies or both. 


What is term insurance?


Term insurance is one of the most popular types of life insurance. As the name suggests, term insurance offers coverage for a limited period. In term insurance, the insurer pays the death benefit (equal to the sum assured) in the event of policyholder demise during the policy period. However, you don’t get any survival benefits if you outlive the policy term. 


One of the primary reasons many people prefer buying a term insurance policy over other life insurance products is that it has the lowest premium. You can get a policy with high sum assured without burning a deep hole in your pocket. 


What is personal accident insurance?


As the name suggests, personal accident insurance offers coverage against death or permanent disability due to an accident. In India, personal accident insurance has not gained as much popularity as it should. However, if you are young and are looking to secure your insurance portfolio, you may consider buying this policy to ensure protection against accidents. 


Personal accident insurance has an affordable premium, and you need not worry about spending a considerable amount before purchasing one. 


Difference between term insurance and personal accident insurance


· Coverage offered


One of the significant differences between term and personal accident insurance is the coverage offered. Term insurance covers death due to natural causes. On the other hand, personal accident insurance provides coverage against death or injuries due to accidents. 


· Benefits paid


When you buy a term insurance policy, your family gets the death benefit in the event of your untimely demise during the policy period. Personal accident insurance pays the death benefit to the family if you pass away due to an accident only. Also, this type of insurance covers the cost of medical treatment as per the policy terms and conditions. 


· Factor determining the premium


When you buy a term insurance policy, age is one of the critical factors that determine your premium. For example, you can buy a policy at a lower premium when you are young. Personal accident insurance considers the occupation as the most critical factor while determining the premium. 


If you are engaged in low-risk professions such as teaching, banking, etc., the premium would be lower than those involved in a high-risk occupation like mining, merchant navy., etc. 


Term insurance vs personal accident insurance – what to buy?


If you are a first-time insurance buyer, you should purchase a term insurance policy and secure your family’s financial future. However, if you already have life insurance and want to ensure complete protection, you can buy a personal accident cover, especially if you are in a high-risk profession. 


This is because it provides security against disability caused by accidents, which the term insurance policy may not cover unless you have a specific rider. Also, the term insurance policy will not offer coverage against temporary or partial disablement and will not pay for the medical expenses.