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The Difference Between Life Insurance and Accidental Death Insurance

30/09/2022 |

The coverage you receive from a life insurance policy is something you predetermine as per your insurance needs so that your family can be financially supported in case of an emergency. This coverage amount is flexible as per the life insurance online policy of your choice, which means that the sum assured can be as less or more as you want it to be, provided you are able to manage the premium payments for the same.
 

But despite this extensive life insurance coverage, most insurance policies do not offer protection against specific risks. Most of these risks revolve around accidental death and disability. Though your family will be entitled to life insurance policy benefits, it may not be enough to cover all the medical expenses as well as uphold their future financial stability. This is where accidental death insurance can help.
 

What is Life Insurance?
 

Life insurance, as you may know, is a contract between two parties, the life insurance provider and the policyholder, where the latter pays the policy premiums as per their selected mode and term of premium payment in return for the insurance coverage offered by the insurer, subject to the life insurance details as predetermined in the contract.
 

The life insurance cover offers death benefits to the family of the policyholder in case of the insured’s untimely demise during the policy term. Depending on the life insurance plan chosen, the policy can also offer maturity benefits in the form of savings or market-linked returns if the insured survives the policy term.
 

The entire sum assured of the policy is paid out on the death of the policyholder, and all types of death, except for certain exclusions, are paid to the nominee. However, beyond the sum assured, no other additional benefits can be offered.
 

What is Accidental Death Benefit?
 

An accidental death benefit is not a complete insurance policy in itself. To avail of a life insurance accidental death benefit, you will need to add an accidental death benefit rider# to your base life insurance policy. The additional but optional benefit comes at a nominal premium which needs to be paid over and above the base policy premiums.
 

The main reason an accidental death benefit rider# is important is because it covers accidental death and pays out the benefits to the late insured’s family. The rider# sum assured is an additional benefit apart from the life insurance payout, which can help the family cover the different medical expenses they may have to incur due to the event. Moreover, the accidental death benefit also covers disability of varying degrees caused due to an accident.
 

Hence, the accidental death benefit rider# is not a standalone insurance policy in itself but an optional benefit that can be chosen along with life insurance.
 

Difference Between Life Insurance and Accidental Death Insurance
 

Even though a lot of people assume that life insurance and accidental death coverage are quite similar in nature, these are some of the major points of distinction between the two:
 

  • Cause and nature of death

    Life insurance plans are flexible enough to cover several types of death, which not only includes natural death but also due to health conditions. On the other hand, an accidental death benefit rider# is specifically meant to cover deaths and disabilities caused due to an accident. The rider# benefits cannot come into effect if the death is due to natural causes.

  • Policy Conditions

    Life insurance offers more flexibility with regard to policy terms and premium payment terms, where you can opt for the coverage for as long as you need and pay the premiums at your convenience. The rider# term and premium payment for the accidental death benefit are fixed or will be as per your base policy. You cannot choose a different policy term and premium payment.

  • Choice of Plans

    Though an insurance provider may offer different optional riders#, there is not much to choose from under a single rider# which already has its pre-determined coverage, terms and conditions. In that aspect, life insurance plans have more variety and offer savings options, investment options and also plain life insurance coverage, depending on the type of policy you choose.

  • Benefit Payout

    If you happen to meet with an accident that causes crippling and permanent disability to any limb or body part, your base life insurance policy cannot compensate for this loss. However, an accidental death benefit rider# will not only compensate for losses due to accidental death but also the partial or total loss of limbs or physical functionality.
     

One of the other major differences between accidental death coverage and life insurance is that the life insurance benefits can be paid out as a lump sum, a regular income or a combination of both for a fixed number of years. The terms for a life insurance accidental death benefit cover are different – depending on the nature and the severity of the disability, a certain percentage of the rider# sum assured will be paid out. It is only in case of an accidental death that the entire sum assured will be paid out as a lump sum, and no further benefits can be offered thereafter.
 

Conclusion
 

Though a life insurance policy and the accidental death benefit rider# are two different coverage options, adding the latter to your base life insurance policy can help increase the coverage and protection of your insurance plan. Like any other rider#, the accidental death benefit cover aims to extend your insurance coverage to shield you from risks that cannot be covered by your base policy.

L&C/Advt/2022/Sep/2354

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

How to decide if the accidental death benefit rider# is essential?

It is important to add riders# to your life insurance plan to protect yourself and your loved ones from the implications of certain risks that you may be exposed to. For example, a critical illness benefit can be useful for someone who may have had a family history of critical illnesses. 

Disclaimers

  • Insurance cover is available under the product.
  •  The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch