People are often faced with the dilemma of choosing an insurance plan to protect their family members should something happen to them. There are various options available to keep an insurance portfolio secure. For example, life insurance and personal accident plans.
Life Insurance and personal accident plans are often confused with each other. The specific benefits of each of them remain ambiguous. Individuals tend to juggle between life insurance and personal accident plans due to the lack of knowledge and information.
To be able to plan well, it is critical to understand the differences between the two.
What Is Life Insurance Or Term Insurance?
Life Insurance provides cover for a definite period of time. If the insured dies during that period, the benefit amount is given to the surviving family, or to a particular nominee.
A life insurance policy covers death due to both natural and accidental causes. It is an excellent means to secure the family’s financial future. In the unfortunate event of the insured party’s demise, the family will still have financial health. The premium for life insurance is low and is based on the age of the insured person.
What Is A Personal Accident Plan?
Personal Accident Plans are another form of insurance. They cover death due to accidents, along with permanent disablement. If the insured person dies or is permanently disabled due to an accident, the family or nominee will receive the benefit amount.
Personal accident plans cover all forms of disablement including partial permanent disablement, temporary total disablement and permanent total disablement. It also covers the medical expenses.
These plans are the essential should the individual become disabled due to an accident. Especially if they are no longer able to earn and take care of their family.
Differences Between Life Insurance & Personal Accident Plans
Both life insurance and personal accident plans seem to have a similar concept and benefits. However, there are some differences that set them apart.
They vary in the following aspects:
#1 Cover Function
Life insurance protects against the death of the insured person due to natural or accidental causes. However, personal accident plans cover death or disability caused only by accidents and not natural causes.
The premium for life insurance is low. Additionally, it is based on the age of the insured. The older you are, the higher your premium will be. In the case of personal accident plans, the premium is low, but it is based on the level of risk involved. This level of risk refers to your occupation. A riskier job means a higher premium.
#3 Medical Tests Requirement
There are medical tests required before life insurance is provided. The policy may be provided or denied based on the medical conditions of the insured.
No such medical tests are required for personal accident plans. If an individual is unfit for a life insurance policy due to medical reasons, he can opt for a personal accident plan. This will provide him with some cushion in case he dies due to an accident.
#4 Lifestyle Of The Insured
The lifestyle of the insured person is not considered before providing life insurance. However, in the case of personal accident plans, the lifestyle of a person is considered. If the person has a risky and adventurous lifestyle, the premium may be high.
Both life insurance and personal accident plans have their benefits and drawbacks. It is advisable to opt for both so that you’re covered against both death and disablement and are able to fulfil the financial responsibilities due to injuries caused by accidents.
*The advice offered in this column is intended for informational purposes only and not intended to replace or substitute for any professional, financial, legal, or other professional advice. If you have specific concerns or a situation in which you require professional help, you should consult with an appropriately trained and qualified adviser.