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Difference between term insurance and personal accident insurance

March 16, 2019 2000
A traditional term insurance plan forms an important part of your financial portfolio. For securing the finances and the monetary future of your loved ones, a term insurance plan serves as a basic necessity. In fact, it serves as an ideal component of any investment portfolio. A traditional term insurance plan offers the coverage against life’s uncertainties by entitling the policy holder’s nominee(s) to receive the main plan benefits i.e. the sum assured in the event of the policy holder’s demise during the plan term. However, if the policy holder survives the policy-term, there are no benefits i.e. there are no maturity proceeds. This feature makes a term insurance plan a very basic form of pure life insurance scheme in which there are fixed terms and conditions towards the coverage that is being offered. There are exceptions though, as many insurance providers do offer a return of premium clause in lieu of which, a policy holder is entitled to receive the premiums that she/he has paid until the term of the policy matures.

On the other hand, a personal accident insurance is a limited sort of coverage option in which the policy holder’s nominee(s) are entitled to receive the benefits only in case  of the demise or permanent disability of the policy holder due to any accident. A personal accident insurance does not take the natural causes into account and this serves as one of the most basic points of difference between the two. A traditional term insurance plan comes with the clauses of protection against all kinds of deaths – be it natural or accidental, whereas a personal accident insurance simply offers coverage against the death caused due to an accident and excludes any kind of natural causes. This is where the general limitation of a personal accident insurance plan comes in.

The insurance providers that offer personal accident insurance offer the whole sum assured on the probability of the policy holder undergoing any accident that severely limits the body’s mobility or renders the person completely disabled and also covers the death due to accident clause. In either of these cases, the policy holder’s nominee(s) are entitled to receive the sum assured. This feature, although quite specifically related to an accidental occurrence, is already covered under a term insurance plan. Therefore, a term insurance plan is much more inclusive than a personal accident plan and besides, a traditional term insurance is quite inexpensive and economical when viewed in comparison with other types of insurance plans.                                                                

HDFC Life offers various term insurance plans that are meant to act as a futuristic platform for the financial security of your loved ones and have been formulated keeping your financial requirements in mind. For details, click on the mentioned link: https://www.hdfclife.com/term-insurance-plans.     

 

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