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.
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.
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.