Two colleagues compare notes on their term insurance benefits and discover a previously unknown cover within the policy.

Varsha: I have been rejecting calls from my insurance provider all of last week and only now did I realise that they were reminders for my premium that is due this year-end. Only on premium due date do I realise I have an active term insurance plan.

Navneet: Term insurance is a simple and a binary product, much like the code we write, on or off.

Varsha: Well I did purchase an accidental death benefit rider, which will branch off into a different payout.

Navneet: Not to be morbid, but isn’t any death covered in a term plan? Why did you purchase this rider as well?

Varsha: Accidental death benefit offers an extra payout on death due to accidents, which is over and above the normal payout on death.

Navneet: Ok the mechanics are clear, but not the intent. Why does one need that coverage as well?

Varsha: Term insurance coverage is meant to replace policyholders’ earning potential in case of an unfortunate event. But, what if one gets into a terrible accident which causes the said unfortunate event. Given the level of medical technology, I am sure the loved ones would commit every resource available to avert the loss. On the flip side, the family would be left with a large medical bill that would certainly make a dent in their finances. This defeats the entire purpose of having a safety net, if a chunk of the net payout has to sacrificed.

Navneet: Ok, this way, term coverage takes care of life goals and accidental payout takes care of medical bills from the accident.

Varsha: Yes and this can bought as a rider which costs from ₹700 per year for ₹10-lakh accidental death cover to ₹12,000 per year for ₹2-crore cover. Remember, this is different from term insurance payout.

Navneet: As per my understanding, medical insurance doesn’t cover accidents. And term cover might seem like a large amount, but spread over education, marriage, pension and retirement, one can ill afford not covering eventualities like accidental death that might claim 15-20 per cent of the payout.

Varsha: Yes, and one more thing. Don’t drink and drive. Nothing covers any accidents caused due to that unhealthy indulgence!

Also read: Make cashless health insurance settlement smooth with these steps

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