People generally assume that because they have a health insurance policy (HI), they would not require personal accident insurance as HI covers hospitalization due to an accident as well. Although this is a correct notion, accidents frequently result in losses that are not typically covered by health insurance.
A personal accident insurance helps to recover losses impacting due to accidents like loss of income, child education, loan protector, animal bites, body burns etc. which makes it different from health and other insurance covers. Later on in this article, we shall examine it in further detail.
Personal accident policy provides you and your family round-the-clock protection of any uncertainties occurring due to accidental injury or disability. This insurance shields the policyholder with the basic coverages of Accidental Death, Permanent Total Disability (PTD) and Permanent Partial Disability (PPD). It also has a variety of optional add-on features. Let us explore some of the important additional benefits under this policy:
1. Loss of Income: One cannot afford to lose his/ her income when there are numerous expenses happening post an accident. This add-on compensates for loss of income due to an accident, by paying a weekly amount for the period the insured person is unable to work. For instance, add-on cover is Rs. 25,000 per week. If an insured is unable to work for about two weeks due to an accident, he/she will receive Rs. 50,000 as a benefit under this add-on.
2. Fracture Care: Usually fractures are excluded from health insurance policies. Whereas, personal accident cover provides it as an added benefit. Further, a claim can be received depending on the severity of the fracture under this add-on. For example, the fracture cover is Rs. 1,00,000. Insured facing a minor fracture can receive an amount of Rs. 25,000 under this add-on.
3. Loan Protector Cover: One would be most negatively affected for loan defaults at the time of an accident. Yet, if the accident resulted in a death, the scenario could become worse. The family of the insured will suffer both a financial and an emotional loss as a result of this incident. Here, the loan protector add-on can offer financial protection by covering a balance due for the holder in the event of a sudden death or total disability.
4. Adventure Sports: People are fond of participating in adventurous sports while going on a leisure trip. One can insure themselves for death and permanent disability with adventure sports cover. This comprises a variety of sports like rock climbing, scuba diving, bungee leaping, auto racing, etc.
5. Body Burns: It could lead from minor to major injury leading an insured to die or get severely injured due to fire or any chemical burns, and other similar burns. Hence, a fixed amount can be provided to the insured if this add-on is opted.
6. Other add-ons: Coma benefits, air ambulance, wheelchair or crutches charges, artificial limb costs, and child tuition benefits are some add-ons available under personal accident insurance.
Along with these advantages, your insurance cover may increase due to a no-claim bonus (approx. 10% - 20%). One would now wonder that covering so many risks and providing numerous benefits could be pricey while buying this insurance. Fortunately, the premiums are affordable. We will understand this with an example.
Mr. Rajinder holds a personal insurance coverage of 50 lakh rupees. In addition, his two children are each protected for Rs. 10 lakhs, along with his wife for Rs. 25 lakhs. He has decided to choose TTD (Temporary Total Disablement) benefits of Rs. 50,000 for himself and Rs. 10,000 for his wife per week. He also included a 10 lakh rupee fracture cover. He pays an annual premium of Rs. 21,231.
Let’s check what happens if Mr. Rajinder falls from stairs and his legs get fractured.
Mr. Rajinder has been advised bed rest for 28 days by the doctor. In such a case he is eligible to claim the following from his personal insurance policy.
| Benefit | Calculation | Claim Amount (Rs.) |
| Fracture Care (10 Lakhs) | 1 fracture paid for 5% of SI | 50,000 |
| Loss on Income | Rs. 50,000 per week for 4 weeks | 2,00,000 |
| Total Payable | 2,50,000 |
Moreover, the premiums are decided on the basis of occupation of the insured person. The riskier the occupation (job profile) of the insured, higher will be the premium. Unlike health insurance, the premium does not change due to a change in age or city. For example, a doctor is less prone to risk for an accident as compared to manual labour. Hence, the premium for a doctor would be less than that of manual labour. Therefore, the policy has categorized insured into levels of risk classes like Risk Class-I, Risk Class-II and so on. The premiums for the age 18 to 69 years will remain the same. Instead, the premium is varied depending on the profession.
An individual will get personal accident insurance cover according to his/her annual or monthly income. For example, 10 times of the annual income for salaried and 20 times for the self-employed. Also, while purchasing a policy or filing a claim, insurance firms may ask for income-proof documents such as an IT return or a Form 16.
Conclusion
Personal accident insurance is indeed a good option altogether for covering various accidental risks. These risks can result in modest to substantial losses. In reality, other people's mistakes can also contribute to some of our uncertainties. As a result, one must also be cautious to secure themselves against any costs or losses that may result from such an incident.
