Business

Personal accident policy: when a slip need not be very expensive

Tread with caution: A typical personal accident policy is very versatile and reasonably priced.

Tread with caution: A typical personal accident policy is very versatile and reasonably priced.  

Safeguard yourself from the financial impact of accidents

Accidents happen despite the best of precautions. To safeguard yourself from the financial impact of accidents, there is a very versatile and reasonably priced policy you can buy.

The Individual Personal Accident (PA) policy covers against accidents round-the-clock and around the world. The compensation is specifically for death or bodily injury caused directly and solely by an accident. It is a benefit policy, which means that it pays you a lump sum linked to the Sum Insured (SI) without reference to any expenses you may incur.

All Indian general insurance and health insurance companies offer this policy under various brand names with SI options as low as ₹25,000 going up to ₹10 crore in some policies.

Maximum SI

The maximum SI is a multiple of the income of the insured person. PA policies can be bought for family members too and multiple year policies are available.

An annual policy for a 40 year-old male with ₹10 lakh SI will cost ₹450 for a death only cover, ₹650 for death and permanent total disablement and ₹950 for including permanent partial disablement as well.

Death due to accident is the main cover and the entire SI can be claimed for it. Permanent total disablement, defined clearly under the policy, also lays claim to a similar compensation.

This envisages situations like loss of two limbs or loss of both eyes. After this claim, the policy can be renewed.

Permanent partial disablement, meaning loss of a limb or an eye and so on has a graded compensation structure, also well laid out in the policy. Any balance SI after such a claim is available for the rest of the policy year and the policy is renewable.

A ₹10 lakh policy for a 40-year-old male will cost ₹450 for death only cover, ₹650 for death and permanent total disablement and ₹950 for including permanent, partial disablement as well.

This brings us to the different types of claims under the policy. Death due to accident is the main cover and the entire SI is available as the claim amount for it.

Permanent total disablement, defined clearly under the policy also lays claim to a similar compensation. This envisages situations like loss of two limbs or loss of both eyes.

Permanent partial disablement, meaning loss of a limb or an eye and so on has a graded compensation structure, also well laid out in the policy.

Apart from these, temporary partial disablement, like fractures, which prevent the insured from attending to his work or profession is also covered. In this case, a weekly disability benefit which is a percentage of the SI is given for the time of such disablement or a specified number of weeks, usually 1% of SI for a maximum of 100 weeks.

The premium rate will take into account the risk level of your profession. Broadly, they are administrative work and physical work (but not hazardous/ manual labour).

Exclusions define most insurance covers! If death or injury is sustained involving the following, the PA policy won’t cover it:

Self-inflicted injury, suicide or attempted suicide, abuse of intoxicants or hallucinogens including drugs and alcohol.

Participating in any criminal enterprise.

Engaging in adventure sport. (Optional covers are available for this).

Participation or involvement in naval, military or air-force operations.

War or any act of war and similar situations.

Pregnancy or childbirth or its complications

HIV/AIDS, sexually transmitted diseases.

There are a host of additional covers and benefits that can be purchased under PA policies on offer by different companies. They include:

Transportation of mortal remains, funeral costs, emergency road and air ambulance charges, cost of prosthetics and even modification of home/ vehicle for disablements, children’s education benefit due to disability of insured, cost of pet care and elder care and even taking care of your loan repayment instalments during the disability period. You can buy a PA policy while purchasing an air ticket.

Costing about ₹150 to ₹200, this is usually a single voyage cover that lasts until the insured returns to the point of origin of the journey or until the end of that calendar month, whichever is earlier.

A simple comparison of the premium cost to benefits will show you that an annual policy is a better option.

There are group PA policies as well, where the premium rate is way lower than individual policies. They can be with credit cards, savings bank accounts or corporate policies for staff.

One of the largest such group policies is Pradhan Mantri Suraksha Bima Yojana, which is part of Pradhan Mantri Jan Dhan Yojana.

The power of group policies is apparent here as a cover of ₹2 lakh for death and disability has an annual premium of just ₹12.

If you haven’t opted for it yet, you should do so now!

(The writer is a business journalist specialising in insurance and corporate history)

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Printable version | Apr 1, 2020 8:26:57 AM | https://www.thehindu.com/business/personal-accident-policy-when-a-slip-need-not-be-very-expensive/article28230094.ece

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