What is Accidental Term Insurance All About?

Accidental Benefits in Term Insurance: A Complete Guide

An accidental benefit is a handy feature in a term insurance policy to provide coverage in case of accidental death or injury. It can be availed by paying an additional premium. Since term insurance is a basic policy, a person can benefit from it with the help of riders. An accidental death benefit rider provides a variety of benefits and reliefs to a person in the event of an accident. However, before any purchase, you have to make sure you know about what you are buying. Here is everything you need to know about accidental term insurance.

Why do you need term insurance with accidental benefit? 

Term insurance is a policy that provides financial protection to a family member in case of sudden death. It’s usually purchased as part of a financial plan. However, it can also be purchased for various reasons such as accidental death and disability. Term insurance also covers against death by providing a lump sum amount or part of a lump sum payment upon the death of the policyholder. The accidental death benefit would add an extra monetary benefit. 

For instance, if a person has a sum assured of ₹ 55 lakh, he or she can add the accidental death rider and increase it to ₹ 75 lakh. The policy will provide the latter sum assured if the person dies due to an accident. The policyholder is required to pay an additional premium amount if they opt for the additional rider that they want to add to the policy. You can use a term insurance calculator to know the premium against your term insurance plan.

How is accidental term insurance different from regular term insurance?

A pure term policy is void of any maturity benefits. This means if the policyholder dies before the term ends, the sum assured will be paid out to the nominee as promised. However, if the policyholder survives the policy term, you will have no returns. Even though term insurance doesn’t have a maturity benefit, there are other term insurance benefits. This type of insurance can be very helpful for people starting a family or if they are the sole earner of an existing family. 

Though term insurance has a limited set of benefits, it can be refined more with the added benefit of rider protection. These riders offer protection against various specific scenarios. If you buy term insurance online with an accidental death/disability rider, it can be termed as an accidental term insurance policy. As you’ve read, it can cover your family against accidental disability and permanent disability, or death due to an accident. 

Features of accidental term insurance

An accidental term insurance is mainly designed for individuals who work in dangerous conditions. It has various features that can help minimise their risks. Here are a few features of accidental term insurance you need to know:

Surrendering the policy

Like term insurance, an individual can surrender their policy at any time. However, unlike term insurance, they would be charged a surrender charge if they surrender the policy within 5 years of purchasing it. This means that they would be charged a certain amount for the policy’s remaining duration.

Tax Benefits

Like term insurance, a policyholder can claim tax benefits with an accidental term insurance policy according to the Income Tax Act. Section 10(D) and 80(C) of the act offer policyholders tax exemption and tax deduction respectively. 

Return of premium

Term insurance policies are issued by different companies and can vary in features. Some of these include the return of the premium feature. This makes sure that even you survive the policy term, you end up with some money.