Mastering Personal Accident Insurance: Ensuring Peace of Mind and Protection

What Is Personal Accident Insurance?

As the name suggests, Accidental Insurance exclusively covers situations arising from accidents. While a Health Insurance Policy will cover the costs of hospitalisation resulting from accidents, a Personal Accident Insurance Policy is tailored to provide comprehensive coverage specifically for accident-related incidents and their associated expenses. Additionally, an Accident Insurance Policy offers a payout in the event of the insured's unfortunate death or disablement. Here are the coverage benefits available within the policy:

[Read: Your Guide to Insurance]

[Read: Personal Accident Insurance - A Must Have Today]

[Read: Here's Why Your Personal Accident Insurance Policy Claim Could Get Rejected]

[Read: A Comprehensive Guide to Buy a Health Insurance Policy in India]

Accidental Demise:

In the unfortunate event of the policyholder's accidental death, the insurer disburses the entire insured sum to the beneficiary as mentioned in the policy documentation.

Complete Permanent Disability:

If the accident leads to total and permanent disability, such as the permanent loss of both limbs or eyes, the insurance company can payout a benefit of up to 100% of the insured sum according to the policy's terms and conditions.

Partial Permanent Disability:

In case of partial permanent disability, such as the loss of a single limb or an eye, the policyholder can get up to 50% of the sum insured, depending on the policy terms and conditions.

Temporary Total Disability:

Should an accident result in a temporary total disability that causes a loss of income during a specified period, the insurer provides a Daily/Weekly Cash Benefit, which can be used to meet the family's various needs.

What Are the Types of Personal Accident Insurance Plans?

Types of Personal Accident Insurance Plans:

Individual Accidental Insurance:

Individual Accidental Insurance offers protection to an individual in the event of accidental harm. It provides coverage for accidental demise, loss of limbs or vision, and other enduring disabilities resulting from an accident. Most leading life insurance and general insurance companies, such as SBI General Insurance, HDFC Ergo, ICICI Lombard, and Max Life Insurance, offer Accidental Insurance Coverage at affordable premiums.

Group Accidental Insurance:

Employers opt for Group Accidental Insurance to provide coverage for their employees. Certain insurers may even offer premium discounts depending on the size of the group. This serves as a valuable incentive or supplementary advantage for small enterprises, available at a lower cost. Nevertheless, remember that this is a basic plan and might offer limited benefits compared to an individual policy.

What Are the Benefits of Personal Accident Insurance?

Outlined below are the Personal Accident Insurance Benefits:

• Offers financial protection against treatment costs and medical expenses for accident-related injuries;

• Provides coverage for accidental death, ensuring the financial stability of your family members;

• Grants a daily cash allowance for a maximum of 30 days during hospitalisation;

• Takes care of the educational expenses and medical bills for dependent children;

• In the event of the insured's permanent disability or death, dependent children (under 19 years old) receive the compensation amount;

• Expedited claims settlement within seven business days upon fulfilling all necessary formalities.

What Are the Personal Accident Insurance Exemptions?

• The natural demise of the policyholder;

• Accidental incidents resulting from engaging in adventurous sports, such as paragliding, scuba diving, bungee jumping, parasailing, etc;

• Injuries deliberately inflicted by the policyholder on themselves or instances of self-inflicted harm, including cases of suicide;

• Complications arising from childbirth or pregnancy-related issues;

• Pre-existing disabilities or injuries sustained by the policyholder prior to obtaining the insurance coverage;

• Accidents occurred while the policyholder was under the influence of substances such as alcohol, drugs, etc.

• Participation of the policyholder in criminal or perilous endeavours leading to an accident;

• Occurrences of mental disorders in the policyholder contributing to an accident.

• Accidents arising from the policyholder's involvement in defence services such as the Military, Navy, or Air Force.

• Accidental events occurring from acts of war or situations similar to warfare.

What are the things to consider when choosing the right Personal Accident Insurance Policy?

Personal Accident Insurance is primarily essential for covering disabilities, whether they are permanent or partial, as they could potentially affect your ability to earn income. Such disabilities can impose additional financial strain on your monthly household expenses. You might require treatments at home (domiciliary treatment), sessions for physiotherapy, or even support from home nursing. Traditional health insurance or life insurance policies typically have limitations when it comes to covering such expenses.

Before finalising the Accidental Insurance Plan, make sure you carefully review the policy document. It is wise not to be swayed by the company's promotional tactics, such as offerings like children's education benefits or reimbursement of medical costs. The educational benefit for children usually has a minimal impact, and your health insurance can usually address medical expenses.

Many insurance plans provide the option to add an accidental death benefit and accidental disability rider to your term plan. While an accidental death benefit might not be of great concern if you already possess sufficient life insurance, it is important to note that these riders usually cover only permanent total disability. Cases of permanent or partial disability are often not included.

What Is the Personal Accident Insurance Tax Benefit?

Unfortunately, the premium paid towards Personal Accident Insurance does not qualify for Income Tax Exemption.

To conclude:

Accidents are unpredictable. These circumstances can take a toll on individuals both physically and emotionally. The financial burden of recuperating medical costs can result in financial strain and give rise to medical-related debts. Therefore, getting an Accidental Insurance Policy becomes essential to ensure the well-being of yourself and your family.

Join Now: PersonalFN is now on Telegram. Join FREE Today to get PersonalFN’s newsletter ‘Daily Wealth Letter’ and Exclusive Updates on Mutual Funds.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.