Group Personal Accident

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A group personal accident (GPA) policy covers accidental death and disability. A Borrowers’ Group Personal Accident Policy is an insurance policy designed to provide coverage against accidental injuries or death for a group of borrowers. Typically, offered by lending institutions such as a bank or an NBFC to cover borrowers. It offers financial protection and benefits in the event of accidents, such as disability benefits, medical expenses, or death benefits, tailored for borrowers’ specific needs.

This notably helps secure the loan amount in case the borrower meets with an accident.

Group Personal Accident Insurance for NBFC borrowers

Why is Group Personal Accident Insurance for NBFC borrowers needed?

Borrowers’ GPA Policies have become more relevant today due to the increased financial risks associated with loans. With rising debt levels and uncertainties, such policies provide borrowers with an added layer of protection, ensuring that in the event of an accident or injury, their financial obligations are covered, reducing the burden on them and their families.

There is a large market for personal and working capital loans today. These are unsecured in nature. Any accident resulting in the death or disability of the borrower would lead to non-payment of the pending EMIs on the loan, especially if the borrower is the sole breadwinner. Non-payment would lead to an eventual write-off. Thereupon taking a borrower GPA policy would help the lending institution prevent loss due to write-offs in case of the borrower’s death or disability.

How does Borrowers’ GPA policy work?

A borrower GPA policy like other similar policies is renewable yearly. The insurance provider decides the sum insured based on either the amount of the loan or the amount due at any given point in time. Just like any other group policy, this one too allows for regular endorsements or amendments. This means that the lending institution can add new loan borrowers to the policy and remove borrowers who have repaid their loans. Insurance providers usually allow endorsements to a group personal accident policy on a monthly basis, depending on the volume of additions/deletions. The insurer charges/refunds the premium on a proportionate basis for additions/deletions.

Typically, the lending institution charges the customer for the insurance premium and finances it as part of the loan. The regulations specify that buying this borrower’s GPA is not mandatory; the borrower can also opt for a loan without this accident cover.

To safeguard their interests, lending institutions take several precautions for borrowers’ GPA Policies. They typically assess the eligibility criteria, such as age, loan amount, and repayment capacity, to determine coverage and premiums. They may also require medical examinations or health declarations to assess the risk profile. Additionally, lending institutions ensure proper documentation, clear communication of policy terms, and efficient claims processing to safeguard the interests of both borrowers and the institution.

Claim process under Group Personal Accident Policy for borrowers

To settle a claim against a borrowers’ Group Personal Accident policy, the insurance provider needs the following documents:

  1. Death/disability certificate of the borrower
  2. Proof of loan with the amount of loan and disbursal date (loan agreement document)
  3. Outstanding loan amount
  4. Valid photo ID card of the borrower
  5. Electronic fund transfer details of the lender

Who is the beneficiary of borrowers GPA?

The most important aspect of this policy is determining the beneficiary of the claim amount. Most insurers pay the claim amount to the nominee/legal heir of the deceased borrower. The lender then has to recover the unpaid loan amount from the nominee/legal heir. This can be a tedious process and is not always successful. However, SecureNow provides solutions whereby the insurer pays the claim amount to the policyholder, i.e., the lender. This suits the lender’s purpose of taking the policy. It also ensures a smooth process for the recovery of loans where the borrower is unable to pay due to an accident.