Personal Accident Insurance

Why Should You Buy Personal Accident Insurance Policy?

*Please note that the quotes shown will be from our partners

Life is uncertain and to compensate and provide financial support during such times, a personal accident policy is a must. It provides financial support to the policyholder if he becomes disabled due to an accident. A few common insurance covers are life insurance, health insurance, and motor insurance. Very few of us are aware of personal accident insurance plans that are of great help especially at the time of emergency. In this article, we would get to know more about the policy and who are eligible for it.

How Personal Accident policy is beneficial?

The need for a personal accident policy arises from the fact that a life insurer offers financial security only in case of death of the policyholder. Accidents however could render one disabled temporarily or permanently, resulting in loss of income, besides an additional burden of medical expenditure. A personal accident policy not only pays at the time of death, but also financially secures you and your family in the event of an accident. It curtails financial constraints that may arise due to income loss.Minor accidents like falling off a bicycle or fracturing an arm are covered by the policy.

What does personal accident policy cover?

A personal accident plan is equipped with the following features:

  • Accidental death benefit - In the unfortunate event of death of the policyholder, the insurer pays the entire sum insured to the nominee.
  • Permanent total disablement - In this case, a certain percentage of the sum insured will be paid to the policyholder.
  • Permanent partial disablement - In this case, a small percentage of sum assured is paid to the policyholder on a weekly or monthly basis. For instance, loss of hearing in one ear, loss of index finger/any other finger, loss of one hand, etc.
  • Temporary total disablement - The policyholder is entitled to get weekly benefits for accidents resulting in confinement up to 104 weeks. For example, fracture in hands or legs.
  • Education grant - The policy bears the education cost of maximum two dependents kids up to the age of 23 years.
  • Transportation of mortal remains - In the unfortunate event of an accidental death, the insurer pays a fixed amount towards transportation of mortal remains. 

What is not covered under personal accident policy?

Accidental policies do not cover disability or death due to:

  • Intentional self-injury, suicide
  • Influence of intoxicating drugs or liquor
  • Breach of law with criminal intent
  • Pre-existing disability/accidental injury
  •  Death or disablement resulting from child birth and pregnancy
  • AIDS/HIV
  • Terrorism
You may also like to Read: Income Tax Deductions for AY 2016-17

How is premium calculated?

In case of personal accident policies, coverage and premium depends on the current level of income and nature of the applicant’s occupation. If you are a teacher living in Delhi, then your chance of meetingan accident is less than a miner. For calculating the premium, insurers have categorized occupations according to the risk level.

Risk Level I (Low Risk)

Risk Level II (Medium Risk)

Risk Level III (High Risk)

Administrative / managing functions

Machine Operator 

Mine workers

Doctors

Garage mechanic

 Jockey

Accountants

Manual labor

Mountaineers

Teachers

 Builder

Professional river rafters

Architects

Veterinary Doctor

Big game hunters

Lawyers

Contractor

 Circus Performers

 

Similar term insurance, premium of a personal accident policy is also very low. For example, HDFC Ergo’s personal accident policy offering Rs 15 lakh can be bought at Rs 2359 only.

Available options in the market

Some of the popular personal accident policies available in the market are:-

Parameters

Bajaj Allianz

The New India Assurance

HDFC Ergo

BhartiAxa

Future Generali

Entry Age

18-65 years

5-70 years

Below 65 years

18-70 years

18-70 years

Sum Assured

Not to exceed 120 times of the average monthly income

Restricted to 72 months income

Rs2.5 lakhs to Rs15 lakhs

Rs 10 lakhs to Rs 30 lakhs

Rs 5 lakhs to Rs 10 lakhs

Permanent Total Disablement

125% of sum insured

100% of sum insured

100% of sum insured

150% of sum insured

100% of sum insured

Permanent Partial Disablement

Up to 70%

% of the capital sum insured as specified in the policy is paid

Depends upon loss of part

% of indemnity as mentioned in the policy document

Up to 75%

Cumulative Bonus

5% bonus per claim free year to a maximum of 50% 

Capital sum insured is increased by 5% on every claim free year subject to a maximum of 50%

Not mentioned

5% bonus per claim free year to a maximum of 50% 

Covers but no info

Children's education bonus

Rs.5000/- for a child or Rs. 10,000/- maximum
for 2 children below the age of 19 or 10% of
capital sum insured, whichever is less

Payable for a maximum of 2 dependent school going children

Payable as per the amount stated in the policy

Covers but no info

Covers but no info

 

Many people avoid personal accident policies due to the absence of tax benefits. However, if your job requires constant travelling by using any mode of transport, you would be considered to be accident-prone. In this case, it is advisableto buy a personal accident policy. This policy provides complete protection against accidental risks and thus, offers financial security in the event of death or disability. The plan works well when you buy it as an individual policy or not as a rider attached with a life insurance policy.

You may also like to Read: Section 80C
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