I am 30 years old. My insurance agent advised me to buy accident insurance instead of a term policy on the premise that my age made it much less likely that I would die of an illness than an accident. He said that accident insurance is cheaper than term covers. Is his logic tenable?
Kunal Jain, Delhi
The benefits under a term insurance policy and a personal accident policy are not identical. Therefore, they cannot be substituted for each other. Both the policies covers death but the personal accident policy covers death only due to an accident. A term insurance plan provides for payment of a lump sum amount (sum assured) in the event of one’s death to his family. A term insurance plan mainly excludes death as a result of a suicide but does not exclude death as a result of an accident. Personal Accident policy on the other hand provides payment of sum insured in the event of accidental death only and excludes death as a result of an illness. In other words term insurance plan provides wider coverage as compared to the Personal accidental policy and therefore, its premium is also higher. The added advantage of a personal accident plan is that it provides cover against partial and total disability resulting due to an accident, in case a person survives the accident.
