Imagine that you are building a strong brick wall to protect your family. You feel completely safe. But what if a sudden storm comes from a direction that was not expected at all? This is exactly how life is.
Initially, when we think about securing our family’s financial future, buying term insurance is the step that most of us take first. It is indeed one of the best decisions you can make. However, as you explore this, you will often find another option that comes up: personal accident insurance.
Is it necessary to have both? Isn’t one enough? Let us explain this in the easiest way possible so that you can make a wise decision for the ones you love.
A Quick Recap of Term Insurance (The Big & Strong Shield)
Step one: Term insurance is a simple agreement between you and the life insurance company. You give a small amount of money every year (this is called a premium).
In exchange, the company assures you that if a tragedy occurs and you die, they will pay a large amount of money to your family.
This money allows your family to meet their everyday expenses, pay for the house rent or school fees, or clear the loans that were taken. It makes sure that financially, they don’t have to live a life of stoppage just because you are not there anymore.
What is Personal Accident Insurance?
This is a very important question. What happens if you get a dreadful accident and still survive? Well, in case of survival after a severe accident, your term insurance won’t pay out anything, as you are considered alive. But just think that a serious accident could change your life drastically. For instance, you could lose a hand, a leg, or even your sight. As a result, you may never be able to go back to work or earn money. This is known as a permanent disability.
Here personal accident insurance can be very beneficial. It is not dependent on the demise of the person. Rather, it provides compensation if a sudden accident results in:
- Accidental death.
- Detachment of limbs (arms or legs).
- Loss of sight or hearing.
- Complete paralysis (inability to move the body).
Such a plan will provide you with a lump sum amount so that you can handle your medical expenses and keep up with your household chores in case your regular income stops.
The Big Difference: Why One is Not Enough
You might say, “If my term insurance covers death by accident, then why should I get an accident policy separately?”
We will explain this through a simple instance of daily life. Say, Rahul is a 30 year old IT guy from Bengaluru who goes to work daily by scooting.
- Scenario A: Rahul has only term insurance. He dies as a result of a bad road accident. Debris family receives the entire policy amount. They are financially secured.
- Scenario B: Rahul has the accident but is lucky to survive. Unfortunately, he gets both his legs amputated and is no longer able to sit and work on his computer. His income stops completely. Since he is alive, his term insurance won’t pay anything. Rahul is now without any income, and the medical bills are enormous.
In the above example, purchasing accident insurance in addition to term insurance would have been done by Rahul. That insurance would have paid him a substantial amount at the time of his disability. That money could have helped Rahul and his family during his recovery and adjusting to a new way of living.
Two Ways to Buy This Protection
There are two different ways, in India, that you can benefit from this double protection:
1. The Rider Option (The Easy Add-on)
You buy term insurance. Most insurers will then challenge you: “Do you also want to add an Accidental Death or Disability Rider?” The rider is very much like putting an extra topping on your pizza. It is a very cheap and easy way of adding this to your main policy.
2. The Standalone Policy (The Separate Shield)
Purchasing a personal accident insurance policy separately from a general insurance company is another option. It is often better, as it allows for more extensive coverage, for example, paying for your hospital stay after an accident or providing you with weekly money while you are at home resting and unable to work.
Who Needs Both?
Although everyone can use some extra protection, it is a must for you to consider buying both in the following cases:
- You have to travel extensively: In case your work keeps you on busy highway drives, riding a two-wheeler daily, or traveling frequently, your accident risk will be higher.
- You do physical work: Jobs involving machinery, heights, or field visits raise the possibility of minor or major injuries.
- You are the only earning member: Your family depends 100% on your salary. So, any interruption to working will cause problems for them.
The Golden Rule: Cheap and Vital
Accident insurance is very affordable. Since it only insures you against accidents and not regular illnesses, the price is very low. A year of great coverage can cost you as much as two movie tickets and popcorn.
Conclusion
These two policies are not competing with each other. They are complementing each other as a team. Term insurance is the first line of your defense; it covers your family in your absence. Accident insurance, on the other hand, is your provision; it covers you and your family in case an accident incapacitates you from working.
Buying term insurance? Then making a decision of getting personal accident insurance at a little higher cost is an intelligent & loving decision for your family. With this, your family kitchen fire will continue to burn, and smiles on their faces will stay intact regardless of what life throws at you.
