Insurance is one of the basic necessities of our lives. We buy life insurance policies to cover for the risk of loss of human life. Health insurance policies are bought to cover for medical expenses in the event of sickness. When these two policies are present in your kitty, do you need a separate accident cover? Well, one might argue that the loss of life due to accident is covered in a life insurance policy and so buying another separate cover would be a waste of money.

But which policy do you have as a back-up if you become partially or permanently disabled in the event of an accident? In contemporary times, travelling in India, be it on the roads or in trains has become riskier. In the event of an accident, a permanent or partial disability can pose a double blow to your financial security. Firstly, medical expenses will burn a hole in your pocket. Secondly, if the disability is severe, you might have to leave your job and your regular stream of salary income can be hampered.

The situation can worsen if you are the only bread earner and you become dependent on your family members due to disability. Buying a personal accident insurance cover thus becomes imperative. These policies are the cheapest and provide compensation to the insured who has been injured in an accident by a third party and which has resulted in his/her partial or total disablement.

Benefits Of Personal Accident Insurance Cover:

1. Death:

In case of accidental death, the sum assured will be given to the nominee as per the policy rules.

2. Permanent Total Disablement:

If a person suffers from permanent total disability due to accident, the proportion of sum assured (SA) paid is 100 per cent in the case of :

Loss of two limbs                                100 per cent SA

Complete loss of sight (both eyes)   100 per cent SA

Loss of one limb and eye                   100 per cent SA

Loss of one limb or one eye              50 per cent SA

3. Permanent Partial Disability:

If a person is permanently partially disabled in an accident resulting in loss of an arm or a limb or an eye or hearing with no medical scope of improvement, the insurance company will determine loss of income due to partial disability and accordingly compensate the insured.  The sum assured will thus vary and is calculated as per policy guidelines.

4. Temporary Total Disablement:

If a person is temporarily disabled in an accident and is unable to perform his/her employment duties, then a weekly benefit (usually 1 per cent of sum assured) is offered by the insurance company subject to a maximum of 100 weeks. This is to compensate for loss of pay due to absence from work in the event of disability.

5. Additional Benefits:

Many accident policies provide for education fund for a maximum of two children in the event of accidental death of policyholder. They also provide for reimbursement of expenses related to carriage of dead body from the accident site to the place of residence.  Many policies also offer a no claims benefit.

For instance, if you purchase an accident policy and have not made any claim at the end of the year, your sum assured will be increased by a certain percentage. With the payment of additional premium, certain expenses like hospitalisation costs and expenses related to purchase of blood in hospital or through blood bank are also reimbursed under the accident policies.

Exclusions: 

Personal accident policies exclude cover for death or disablement arising out of sickness, mental disorder, suicide, pregnancy, influence of liquor, drugs, criminal action, war, nuclear hazard, riots, dangerous sports, etc. The insurance company will determine your risk profile according to the nature of your occupation. For instance, a labourer working in an underground mine will come under high risk category while a doctor or an accountant will be classified under normal risk category.

Further, the income earning capacity is a major factor taken into account to calculate the maximum sum assured. To summarise, personal accident insurance policies are low cost with high benefits. The hardship, both physical and mental that a disabled has to go through is unfathomable. At least the financial burden to deal with disability can be reduced by buying a personal accident policy.

For the young and working, it is a definite must-have as their chances of meeting with an accident are high compared to getting affected with diseases. Personal accident insurance thus should take precedence over life and health insurance cover.

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