Personal accident cover vs standalone term insurance: Which is best fit and gives better value for money?

Personal accident cover and standalone term insurance, both of which provide financial protection, may seem similar to many but are different in various aspects. The question about which is the best buy and most suitable financial protection in individual cases will be answered here. For those deciding which to choose, this is the right place to learn about similarities and differences.

Similarities between accident cover and term insurance

Starting with similarities between accident cover and term insurance, it is important to note that

Differences between accident cover and term insurance

Even though, a cheap personal accident policy may seem like a smart buy than term insurance but the two are not interchangeable as they protect against different risks and serve different purpose.

• Personal accident insurance protects against risks that neither term insurance nor health insurance addresses. It offers disability benefits and often reimbursement for accident-related medical expenses.
• Moreover, accident cover can be purchased for single events like a long taxi ride or a train journey, but term insurance is a long-term financial commitment.

When to buy accident cover or term insurance

It is recommended that one must buy term plan first and as early as possible as many term plans now offer protection against accidents. Some policies even cover medical expenses and partial disability benefits, adding more comprehensive protection.

Since life insurers underwrite policies based on current health status at the time of application, chronic diseases like diabetes, heart condition or other common middle-age ailments might attract higher premium. Life insurers may even decline to offer policies in case a person is suffering from serious medical conditions. Notably, personal accident cover becomes the next-best alternative for those who cannot obtain term insurance.

Term insurance can also be supplemented with a personal accident policy to cover disability and accident-related medical expenses that are not included in the term insurance plan.