Accident Insurance Policy

Accident Insurance Policy - Benefits and Exclusions

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Accident insurance is generally last on the list of priorities when it comes to insurance. Far less popular than its life insurance, term insurance, motor insurance or health insurance counterparts, its value is just as underestimated.

While health insurance covers hospitalisation and term insurance will help take care of your family’s financial needs in the case of your demise, neither provide financial assistance if you should be partially or fully disabled either temporarily or permanently. This is where accident insurance policy will come to your rescue as its main purpose is to cover these very scenarios.

An accident policy is particularly important if you are the sole bread-winner for your family, as there would be a loss of income if you are incapacitated in any way for prolonged periods of time, not to mention mounting medical expenses.

Standalone accidental insurance policies provide a wide cover:

Most life insurance policies provide accidents as a rider, but these are generally restricted to permanent disability or a basic cover for accidental death. Further, the cover offered is linked to the base sum assured. Thus, it cannot be exceeded beyond a certain level.

A standalone personal accident policy however, covers all kinds of losses including temporary disablement, income loss and hospitalisation. Also, one can make a claim if they are victims of any kind of accident – falling down the stairs, breaking a hand or leg while playing sports, or being in a road accident.

Personal Accident Policy Coverage:

Accidental death:

If you should go through an accidental death, the insurer will pay your family the sum assured. In such cases, the nominee gets 100% of the total sum assured as per the cover of the policy.

Permanent partial disability:

A ‘permanent partial disablement’ is an injury that results in the loss of speech, eyesight, feet or hands. The policyholder receives a percentage of the sum assured for a specific period of time or as a one-time lump sum payment.

Permanent total disability:

A ‘permanent total disablement’ is an injury which prevents the insured from going back to his normal duties for a continuous time frame of over 12 months with no hope of improvement. The nominee is entitled to make a claim for the total sum assured, in such a situation.

Temporary total disability:

‘Temporary total disablement’ is when a loss occurs due to an injury sustained within the policy year where an individual is not able to carry out their normal work and other duties for some time. Insurers generally provide a daily or weekly benefit in such cases.    

The compensation is determined on the basis of the nature of the impairment. Also customised coverage options are provided, like in the case of ICICI Lombard, where an individual can opt for a sum insured from a starting range of Rs.3-5 lakhs that goes up to between Rs.20-25 lakhs.

There are a number of disclosures that the individual would have to make while purchasing a policy but these usually do not cover medical history.

Disclosures and exclusions in Personal Accidental Insurance:

When it comes to accident insurance policies, the premium is the same for people across age groups unlike medical insurance plans where the premium changes on the basis of age or lifestyle habits. The main factor taken into account while deciding premium is the income of the individual.

For example, in the case of the accident policy offered by Tata AIG, for salaried individuals, the sum insured provided is only10 times the annual income and for self-employed individuals, it is 20 times the annual income.

Some policies may not even cover high-risk jobs like that of a pilot or air hostess. They may also have certain exclusions, such as extreme sports like paragliding or bungee jumping.

Premium Amount For Accidental Insurance Policy:

Accident insurance costs less than term insurance. A premium of around Rs.3,000 a year can provide a sum insured of around Rs.20 lakh. A term policy for the same sum insured would cost around Rs.4,000-5,000 per year for a 30-year-old policyholder, and this figure would rise for those in the 40-plus age bracket.

However, when it comes to premiums for accident insurance, you should note that they are generally no more than around Rs.25-30 lakh at the most. While life insurance policies can offer a cover of even up to Rs.1 crore, this is not commonplace when it comes to accident insurance.      

In conclusion:

Accident insurance is an important investment as it provides peace of mind amidst much uncertainty. Though there is the option of choosing a family-inclusive personal accident cover, it is more prudent to opt for an individual cover.

This is because family-inclusive plans might have a lot of restrictions where the cover might not be as adequate as an individual plan. Before buying accident insurance, also note that death or injuries caused due to illnesses are not covered under such plans, even if the illness can be directly linked to the nature of your job.

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