Distinguishing Term Insurance From Accidental Insurance


Life is unpredictable, and it is essential to have a financial safety net in place to protect your loved ones. When it comes to life insurance, two common types of policies are term insurance and personal accident insurance. While both provide coverage in case of an unfortunate event, they differ in terms of their scope and benefits.

What is Term Insurance?

Term insurance is a type of life insurance that offers coverage for a specified period or term. If the insured person passes away during the policy term, the nominee receives a death benefit. This ensures that the family members are financially protected in case they lose the primary breadwinner. Premiums for term insurance can be paid monthly, quarterly, semi-annually, or annually. It is generally recommended to purchase term insurance earlier in life as premiums tend to be lower for younger individuals.

What is Personal Accident Insurance?

Personal accident insurance provides coverage in the event of death or disability caused by accidents. It protects individuals from the financial implications of unexpected accidents and covers medical costs related to accident injuries. The payout from this type of insurance can help individuals meet their financial obligations even if an accidental disability results in a loss of income.

Differences Between Term Insurance and Personal Accident Insurance

While both term insurance and personal accident insurance provide death benefits, there are some key differences between them.

Coverage Offered: Term insurance covers natural deaths as well as deaths caused by accidents. On the other hand, personal accident insurance specifically covers deaths or disabilities resulting from accidents.

Benefits Paid: Term insurance pays out death benefits to the nominee in case of the insured person’s demise due to any cause, whether natural or accidental. In contrast, personal accident insurance pays out death benefits only if the insured person passes away due to an accident. Additionally, personal accident insurance covers medical expenses and disabilities resulting from accidents.

Reasons to Consider Term Insurance

Term insurance is a popular choice for individuals looking to protect their family’s financial security. Here are some reasons why term insurance may be the right choice for you:

Affordability: Term insurance is the most affordable form of life insurance, making it accessible to a wide range of individuals.

Financial Security: A term policy ensures that your family is financially secure in the event of your untimely demise. The death benefit can help cover living expenses, mortgage payments, children’s education, and other financial obligations.

Optional Riders: Many term plans offer additional riders that can enhance the coverage as per your specific needs. These riders provide benefits such as critical illness coverage, accidental death benefits, waiver of premium, etc.

High Coverage: Term plans offer high coverage amounts at relatively affordable premiums compared to other types of life insurance policies.

Tax Benefits: Premiums paid towards term insurance are eligible for tax benefits under Section 80C of the Income Tax Act, 1961.

Understanding Your Insurance Coverage Needs

Determining the appropriate insurance coverage depends on various factors such as your life goals, financial needs, age, and family’s requirements. Consider the following scenarios:

Young Professionals: As a young professional with no dependents yet, focus on securing a term policy that provides coverage until retirement age. This will ensure financial protection for future family responsibilities while keeping premiums low.

Middle-Aged Individuals: If you have dependents and significant financial obligations such as housing loans or children’s education expenses, opt for a term policy that covers these liabilities until they are fulfilled.

Individuals Approaching Retirement: As you near retirement, consider a term policy that covers any outstanding financial liabilities and provides a sufficient death benefit to support your spouse or dependents.

Calculating Your Insurance Coverage

To determine the ideal insurance coverage, consider your current and future financial obligations. Start by assessing your assets, including monthly income and liquid savings. Then calculate your monthly expenses and existing debt obligations. The difference between these two amounts will help determine the required coverage.

Use a reliable term plan calculator to get an estimate of the coverage amount you need based on your age, income, and specific needs. It is important to regularly review and adjust your insurance coverage as your circumstances change.


Term insurance and personal accident insurance serve different purposes in providing financial protection. While term insurance offers comprehensive coverage against natural deaths and accidents, personal accident insurance specifically covers accidents and related disabilities. Understanding your unique needs and financial goals will guide you in making an informed decision about which type of insurance is right for you.

As you embark on securing your financial future, use reputable online tools like a term plan calculator to calculate the optimal coverage amount for your specific requirements. Remember, choosing the right insurance policy is crucial in ensuring the well-being of your loved ones in times of uncertainty.


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