Why it makes sense to go for a personal accident insurance policy?
You have a term insurance plan to secure your family’s future and a comprehensive health insurance policy to pay your medical expenses. You have insured your car against all losses or damages, while your house is covered against both natural and man-made calamities. Are you missing on something? The chances are high that you don’t have a personal accident insurance policy.
Take the case of my friend Rajiv who is working as an IT professional in a leading company in Mumbai. Being thesole earner of the family, he has purchasedterm insurance and health insurance policies in addition to investing money in some growth-oriented investment options. But he doesn’t have a personal accident insurance policy. It means, if he dies in a tragic accident, his term insurance will pay the entire sum assured to his nominee, but what if the accident leaveshim disabled? The latter canresult in job loss and the loss of income. A health insurance policy would only help in recovering his hospitalisation expenses. It would not safeguard the family from the loss of livelihood. His savings might help the family for some time, but willit be sufficient?
Accidents don’t just happen on roads. They can happen when you are working in the office, travelling or enjoying a movie at a hall or even when you are in the ‘safe’ atmosphere of your home. While accidents affect physically, they make a huge impact on your finances too. Whileyour medical expenses increase as you undergo treatment, your source of income is also disrupted till you recover fully.Therefore, it is important to have a personal accident insurance policy.
In the case of my friend Rajiv, while a personal accident insurance policy will make a payout following the accidental death of Rajiv (thereby acting as the term insurance), it willalso make the payment in the case of permanent or partial disablement. A personal accident insurance is a tool thatcan safeguard him against the loss of income following an accident.
The unfortunate accident can happen with anyone. In fact, 400 people are killed in road accidents every day.
The only thing which is certain in life is its unpredictability.Personal accident policies, which are pure protective cover, help in dealing with the unpredictability.
There are two main reasons for buying a personal accident insurance policy in India:
- Shockingly called the accident capital of the world, India accounted for over 2 lakh deaths in road accidents, as per the Global Road Safety Report 2015, prepared by the World Health Organisation (WHO). While around 80 people drown every day between 2010 and 2014, most deaths happened in the age group of 18-45 years. Also, nearly 15,000 people die every year, while crossing railway tracks
- The policy fills the gap created by the term and health insurance policy
A personal accident insurance is a necessity of today’s time as it comes with the following benefits:
- Family security
- No medical test and documentation
- High cover at affordable premium rates
- Worldwide coverage
- Can be purchased for the entire family
- Easy claim process
- 24×7 support service
How a personal accident insurance policy complements a term insurance policy?
Also, known as a ‘death only policy’, a term insurance plan covers accidental or natural death. In the event of the policyholder’s death, the nominee would be entitled to get 100% of the sum assured. However, what would happen if the policyholder doesn’t die but suffer from a disability? As a term plan only covers death, no coverage will be given in the case of disability. Term plans do not cover disabilities and a loss of income in case you are forced to stay out of the action for a certain number of days due to an accidental injury or disability. In this case, a personal accident insurance policy comes to your rescue.
What does personal accident policy cover?
No matter how small or big accident is, it is covered under a personal accident insurance policy. It not only covers road mishaps,but also offers you coverage if you slip on stairs, twist an arm during a cricket match, receive burns while enjoying the fireworks on Diwali, or get electrocuted by a faulty home appliance.
How to calculate premium of a personal accident insurance policy?
Unlike term insurance policies where premiums are dependent on your age, sum assured and tenure, personal accident policies compute premiums on the basis of your income and the risk involved in your profession. It means, the premium of a 25-year old can be higher than a 55-year old person if his/heroccupation entails more risk than the latter. In most of the cases, insurance companies have categorised professions under the following heads for the premium calculation:
|Class 1 (Low Risk)||Class 2 (Medium Risk)||Class 3 (Very High Risk)|
|Lawyer||Veterinary Doctor||Airline Pilots|
|Architect||Machinery Operator||Workers in Underground Mines|
Even if you belong to a high-risk category, you should go for a personal accident policythat gives benefits, which will outweigh the costs in a long-run.
Rider or a standalone policy?
A personal accident policy is available in many variants— as a rider with a term insurance policy, as an add-on to your motor insurance cover, as a group insurance from your employer or as a standalone policy. However, riders offer a limited coverage as compared to standalone insurance policies. They offer only a basic accidental death and permanent disability cover. On the other hand, a standalone accident insurance policy offers comprehensive cover and can be customised as per your needs.
Just stop for a minute to think what will happen to your family if you become disabled following an accident? There would be no income; however, medical prices, bank EMIs, and other expenditure will keep on rising at an unprecedented rate. To wear down such a state, it is essential to buy a personal accident insurance policy. It will help in alleviating the stress of your family by providing them the necessary financial support.