Group Personal Accident

Life insurance policy is a contract between you and your insurer under which, the insurance company provides a lump-sum payment, known as the death benefit, to beneficiaries upon the insured’s death. It acts as an income replacement for the family of the life assured. Life insurance caters to anyone that is financially dependant on you in the unfortunate event of death.

On the other hand, accidental insurance or personal accident insurance provides protection in case of death and injuries resulting from an accident. This policy guards an individual only in the event of an accident. The incident may cause impairment, whether short-term or lifelong wounds or even demise. Claims such as accidental death, accidental disability, accidental dismemberment are triggered under personal accident insurance.

Both life and accidental insurance provide strong financial support in case of death of the policyholder so that the financial future of policyholder remain unaffected. These policies make sure that your dependents can lead a decent life economically despite your death. Although both policy majorly covers the death benefit there is a thin line of demarcation. The reason of death allocates the difference as accidental insurance as the name suggest covers injuries, death caused due to accidents but life insurance triggers death caused due to natural reasons. Following are the other differences between life insurance and accidental insurance:

  • Life insurance is tax deductible but accidental insurance does not possess tax benefit.
  • Life insurance is a costly proposition while personal accident policy is cost-effective and cheap. You can avail Personal accident policy of sum insured Rs. 10 Lakh by paying the premium of Rs.1000. The cost of availing personal accident insurance is minimal. It can be purchased even if you do not have deep pocket because of its lower premium.
  • Life insurance policy covers natural death while on the other hand, the accidental policy covers only accidental death.
  • The accidental policy covers permanent total or partial disability, accidental dismemberment, burns, fractures etc. But life insurance does not cover these medical eventualities. It only provides a death benefit as life insurance is beneficial for your financial dependant and not something that you will live to benefit from.
  • One can take accidental policy as a rider or add-on cover with health insurance or life insurance but life insurance is a standalone policy.

Read: What is the meaning of life insurance?

Both personal accident insurance and life insurance plays a key role in risk management portfolio. Should either of these occur, their family would receive lump sum payment to compensate for the breadwinner’s inability to financially support them? Sum insured under both the policies is passed on to the legal heirs who could be the wife or children of the insured. These policies can go a long way in ensuring your peace of mind during the turbulent period.

Read About: What does personal accident insurance cover?

Case Study: Rohit working in a transportation firm has met with an accident. He lost his one limb and the hospitalization costs incurred is around two lakh. During such devastating state, his family has no other income source. Due to permanent partial disability, Rohit is not even in condition to work for a long haul. Under such case, there are two scenarios:

Scenario 1: Rohit has a personal accident policy. In such case, he will receive a 50% or 100% payout of sum insured depending upon the terms of policy. He will be compensated for some amount of lost income. Accidental insurance will provide coverage during such eventuality in order to provide financial stability to the insured.

Scenario 2: Rohit has a life term insurance policy. In such a case, he will not receive anything for permanent partial disability as term life insurance covers only the death benefit. All expenses have to borne by him only. All his savings will be wiped away in such a dark phase.

Hence if you ignore these policies, your lifelong savings can be wiped away because of mishaps. Be it an accident or natural cause, death is inevitable and it is a necessity to buy these policies to provide strong support to financial dependents.

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