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Term Insurance Vs. Personal Accident Insurance – Know The Difference!

It’s not possible to predict when life may throw some unexpected emergency your way. And while there’s not much you can do about it, having a life insurance plan backing you up can be very helpful. Life insurance protects your family and helps ensure that they are financially well-equipped to protect their life goals.

Investment plans also act as tax-planning tools, as many avenues help reduce tax liability. There are different types of investment plans, and by choosing the right one, you can invest according to your needs and grow your savings.Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 7th July 2024
Modified on: 7th July 2024
Reading Time: 15 Mins
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And when it comes to buying life insurance, one of the key things that many people wonder about is the meaning and the scope of the different types of life insurance plans out there. Two such types of covers are term insurance and personal accident insurance.

Are they the same? What is a term plan, and what is personal accident insurance? Let’s find out the answers to these questions.

 

What is term insurance?

 

Term insurance is a kind of life insurance that provides you with a life cover for a specified period of time - or a specified term. In case the insured person passes away during the policy term, the insurance provider pays death benefits to the nominee of the insured. This ensures that the nominee and the surviving members of the insured person’s family are financially protected in case they lose the sole or the primary breadwinner.

The policyholder will have to pay the insurance company a premium in exchange for the life cover. These premiums can be paid monthly, quarterly, semi-annually or annually, based on the terms and conditions of the policy purchased. Some plans even offer the option to pay a lump sum amount as a single premium payment.

And while there is no term insurance age limit in place, generally speaking, each term plan comes with its own eligibility criteria. This includes the age range for purchasing the particular term plan. General consensus is that it is better to purchase term insurance earlier in life, since the premium tends to be lower for younger people.

 

What is personal accident insurance?

 

No matter how careful a person may be, the possibility of meeting with an accident on the road or in the course of travel is never entirely zero. A personal accident insurance plan helps protect people from the financial implications of such an unexpected accident.

It is a type of insurance that covers deaths that occur on account of accidents. Of course, the fine print may vary slightly from one plan to another. But generally speaking, personal accident insurance helps ensure that in case the insured person passes away in an accident that is covered by the plan, the nominee is paid the sum assured as death benefits. These plans may also cover the medical costs involved in treating the insured person depending on terms and conditions available in the respective product if they are injured in an accident, so they are not financially burdened by this unexpected occurrence.

 

Difference between term insurance and personal accident insurance

 

Personal accident insurance may seem to be very similar to term insurance, but there are many subtle differences between the two. Let’s find out what these differences are.

 

• Coverage offered:

 

Term insurance covers all kinds of natural deaths. Personal accident insurance, on the other hand, is specific to deaths or injuries caused specifically by accidents.

 

• Benefits paid:

 

Term insurance pays out death benefits to the nominees of the insured person, in case of the latter’s demise. Personal accident insurance, on the other hand, pays out death benefits in case the insured person passes away due to an accident only. This kind of insurance could also cover the cost of medical treatment depending on the product terms and conditions, in case the insured person is injured in an accident.

 

Reasons to buy term insurance

 

A personal accident insurance plan can be very beneficial, as you’ve seen in the previous sections. However, term insurance in India, despite being the simplest kind of life insurance there is, also comes with a range of benefits. For people whose primary reason is to ensure their family has a safety net in case of their demise, there are many reasons to buy term insurance plans.

Here are some of them.

  • Term plans are the most affordable kind of life insurance.
  • They help protect your family’s financial security in any eventuality.
  • They offer optional add-on riders.
  • They give you significantly high coverage at relatively affordable costs.
  • The premiums are eligible for tax benefits u/s 80C of the Income Tax Act, 1961, subject to provisions stated therein.

 

Conclusion

 

That sums up the difference between personal accident insurance and term insurance in India. If you are unsure about which kind of insurance plan to get, take a closer look at the determining factors, like your life goals, your financial needs, your age, and the needs of your family. you may prefer to purchase a life insurance plan that checks all the right boxes so that you can ensure the financial security of your loved ones.

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Disclaimers:
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~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. 

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Disclaimer

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

 

Please refer to BALIC Privacy Policy

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Disclaimer

%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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Life Cover + 16% Discount** +Save Tax*!
Under Section 80C & 10(10D) of Income Tax Act, 1961*
Get Life Cover + Save tax up to Rs 46,800*
₹2 Cr Term Plan
@ 21/Day²
Free Health Management Services
upto ₹ 31,000 p.a.^^

Disclaimer:

2Above illustration is for Bajaj Allianz Life eTouch II- A Non-Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N198V01) considering Male aged 23 years | Non-Smoker Preferred | Annual Income =>Rs. 15,00,000 per annum | Indian Resident | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 2,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 7,159. 2nd Year onwards premium is Rs. 7,760. Total Premium is Rs. 2,32,199 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly instalments (Lumpsum Payout Percentage : 40, Income Payout Percentage : 60). Income payout instalment opted for 40 years | Premium shown above is inclusive of Online Discount only, no other discounts have been considered and exclusive of Goods & Service Tax/ any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.

**5% Discount applicable for customer's first individual life insurance policy, applicable only on first year’s premium. 5% Discount for salaried customers, applicable only on first year’s premium. 6% Discount on online purchase is available for regular premium payment and limited premium payment frequency, applicable only on first year’s premium.

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy. Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

^^Get Free Health Management Services upto Rs. 31,000 per year

Health Management Services Frequency Cost (₹)
Doctor Insta-Consultations 3 consultations per month = 36 consultations per year Average cost per session = ₹500
Total cost per year = ₹500 * 36 = ₹18,000
Health Coach
(Diet & nutrition consultations)
1 consultation per month =
12 consultations per year
Average cost per session = ₹500
Total cost per year = ₹500 * 12 = ₹6,000
Emotional Wellness
(Psychologists consultations)
1 consultation per month =
12 consultations per year
Average cost per session = ₹500
Total cost per year = ₹500 * 12 = ₹6,000
Network discounts: Throughout the year Assumption – Total expense on these services throughout the year
Medicines (M) = ₹5,000
Lab-test booking (L) = ₹5,000
Total discounts that can be availed:
M - 10% = ₹500
L - 10% = ₹500
Total per year as per assumption ₹31,000

Note: The above mentioned costs are based on estimated average market price for respective services. T&C apply.

Doctor Insta-Consultations and Health Coach Services are unlimited and the above numbers are assumed only for the purpose of calculation of the yearly benefit.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

 

BJAZ-OT-EC-10260/24

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