The number of accidents has increased over the past few years. The official figure of road accidents has crossed 2357 in the first 5 months of 2022. Now, this can be attributed to a growing number of vehicles on the road, poor infrastructure, and non-adherence to road safety rules. Since an accident could cause death or permanent/temporary disability to the parties involved, increasing the need to avail of a personal accident policy. Here we look at the nuances of personal accident insurance and how they come in handy during such unforeseen incidents.
What is a personal accident insurance policy?
A life insurance policy offers coverage against the death of the policyholder. Also, a personal accident policy provides coverage against permanent/ temporary disability, which often results in income loss and an increased medical expenditure burden. Thus, these policies offer coverage toward death and provide financial support to the family in the event of an accident. Also, these policies cover even minor accidents which could lead to fractured arms or injuries.
Inclusions in the personal accident policy cover
The personal accident policy covers the following:
- Accidental death benefit:
In the event of the death of the policyholder, the insurance company pays the sum insured to the nominee. - Permanent total disablement:
If the accident results in a permanent disability of the policyholder, a certain portion of the sum insured would be paid to the insured. - Permanent partial disablement:
A relatively small percentage of the sum assured is paid to the insured at a pre-determined frequency which could either be weekly or monthly. - Temporary partial disablement:
There is a possibility that the policyholder of the disablement is temporary. In such a case, the payouts would align with the clauses mentioned. There could be weekly benefits that are available for several weeks up to a maximum of 104 weeks. Temporary partial disablement could be in the form of a fracture in the hands or legs. - Education grant:
There are some policies that offer coverage for the continuation of education of your children. It is allowed to a maximum of 2 children up to the age of 23 years. Thus, this is often an add-on rider to the base personal accident policy. - Mortal remains transport:
If the accident results in the death of the policyholder in a place away from the hometown, then the transportation cost to transfer the mortal remains from the place of accident to the place for final rites is covered under this policy. - Loss of wages:
Again, an add-on rider offers coverage against possible loss of wages. Any type of disability or death would lead to a loss of income. So, this add-on rider would protect against such loss of wages. - Monsoon-related coverage:
There are additional add-ons in the form of coverage against monsoon-related accidents such as electrification, accidents occurring due to slip, mud, etc.
Exclusions of personal accident policy cover:
However, these policies do not cover any death or disability due to:
- Self-injury or suicide
- Driving under the influence of drugs or liquor
- An illegal activity carried out with criminal intent
- Any pre-existing condition in the form of injury or disability
- Pregnancy-related death or disability
- Terrorism-related attacks leading to an accident
- AIDS / HIV-related complications arising post-accident.
Factors impacting premiums of personal accident policy
Now, there are various factors that affect the premium of personal accident policy. One of the primary determinants of the premiums is the applicant’s occupation. Also, certain jobs are low-risk in nature, where the premium is considerably lower. This is based on the frequency of travel, particularly the probability of being a part of an accident.
For a teacher, job-related travel is minimal when you compare it to a sales representative who has to visit clients at their location more frequently. The other factors to determine the same would include income level, security of a job, age, prior instances of meeting with an accident, etc.
Types of personal accident insurance
Like all other cases, this type of insurance could be availed based on individual insurance or group insurance. Group insurance is often availed by the employer on behalf of the employees. Typically, employees on the field need to opt for this plan who travel frequently and are hence subject to possible risk of accidents.
It is pertinent to note that there are no tax benefits toward the premium you pay for personal accident insurance. This has been a key deterrent in individuals availing the personal accident insurance.
Ideally, you should opt for a standalone personal accident insurance plan to maximize the optimal benefit. Availing of it as an add-on to your life insurance policy is good, but it does not add as much value. In fact, even some bank accounts, car insurance plans, and credit cards also have personal accidental coverage benefits attached to them. However, the best of the lot is opting for a standalone plan which you can customize to your advantage.
In a nutshell:
Hope this note helps you assess your requirement in terms of personal accident insurance. Like all other plans, you need to compare the available options and choose the one that helps you optimize on the premium and benefits. So, you can use the SecureNow platform to compare the available products. It provides a comprehensive comparison and eases the entire procedure of availing of insurance.
Written By-
Gunjan Saxena
MBA Insurance Management
With a robust background in the insurance industry, Gunjan is a seasoned professional who brings 10 years of expertise to group personal accident insurance. Throughout her career, she has demonstrated a deep understanding of the intricacies and nuances of insurance products, particularly in personal accident coverage. Having worked closely with both individuals and businesses, she has gained valuable insights into the diverse needs and challenges faced by clients seeking insurance protection. Her experience encompasses designing tailored insurance solutions, providing expert advice, and guiding clients through the insurance process with confidence and clarity.
Through her articles, Gunjan aims to educate and inform readers about the importance of group personal accident insurance and the benefits it offers in safeguarding against unforeseen events.
