Personal Accident Insurance – 16 important points everyone should know

At 28, Viren was one of the most punctilious planners that I had met in my life. He had a good professional life, completing the picture was his loving wife and two kids, whom he adored. Being a family man, he had bought two term insurance policies and a family floater health insurance policy. Armed with both these insurance policies, he was confident about his family’s financial security in his absence.

However, life is not so simple and easy. Viren met with an accident and his grave injuries left him incapacitated to work for at least next two years. While his family floater mediclaim policy took care of his hospitalization expenditure, for the rest, he dug into his rainy day savings to meet household expenses. However, the ordeal did not end here. As the sole breadwinner was unable to continue his job, the financial situation deteriorated. As term insurance policies pay benefits in case of death only; in this case, Viren was alive, and therefore, his term insurance policy didn’t pay anything. Suddenly, his poor state struck hard and Viren asked himself, if he could’ve done anything to avoid his gloomy state. 

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Yes, the situation would’ve been different if he had bought a personal accident insurance policy. The policy offers financial aid to deal with the situation. India has the highest number of road fatalities in the world, with one person being killed on road in every four minutes. While it may be an economic loss of 3%of the GDP, it is a much bigger loss for a family. It wipes out 100% income of the family, if the victim was the sole breadwinner. Therefore, it makes sense to buy a personal accident policy, if not for ourselves, but at least for the sake of our loved ones. Despite of the fact that personal accident policies give financial comfort in case of accidents, only few people actually go for it due to lack of awareness.  The best way to bust the confusion is to ask questions related to personal accident policies. You should always remember, “It is the TASK of a buyer to ASK questions”. Here we have handpicked some of the most commonly asked questions on personal accident insurance policies and try to give answers of them to help you understand better.

1. Why should I buy a personal accident policy?                                                                          It is strongly recommended to buy a personal accident policy which not only protects your family in the event of accidental death but also covers disablement and loss of earning capacity. It becomes more important if you have taken loans as it gives protection towards repayment of outstanding balances at the time of an accident.
   
   
   2.   What types of coverage are available under personal accident policy?
   Your personal accident policy offers the following coverage:
   ·         Accidental death
   ·         Permanent total/partial disablement
   ·         Temporary disabilities
   ·         Accidental hospitalization expenses reimbursement
   ·         Terrorism and acts of terrorism
   
   
   3.   What types of events are covered under personal accident policy?
   Some of the events covered under the policy are:
   ·         Rail/road/air accident
   ·         Any injury caused due to any collision/fall
   ·         Any injury due to bursting of cylinder
   ·         Dog-bite, snake bite
   ·         Drowning, poisoning, burn injury
   ·         Mental, nervous or emotional disorder
   
   
   4.   How does the insurer compute premium rates?
   Unlike life and health insurance policies, the premium of a personal accident policy doesn’t depends on the individual’s age and lifestyle (whether a smoker or non-smoker). In fact, premium rates are same for individuals across different age-groups. What decides the premium is one’s profession. If you are a teacher, then your chances of meeting an accident is different from a worker employed in a mine. So every profession is divided under different categories as per their risk levels. Here’s the categorization:
   
   

   Class 1 (Low Risk)	Class 2 (High Risk)	Class 3 (Very High Risk)
   Lawyers	Builders	Mountaineers
   Teachers	Contractors	Journalists
   Accountants	Cash carrying employees	People working in explosive industries and mines

   
   
   5.    How much insurance coverage is sufficient?
   There is no yardstick to calculate the required sum assured. However, the rule book says that in any case, it should be 100 times of your annual income. For instance, if your present monthly income is Rs 25,000 then your cover should be at least 3,00,00,000. This amount will ensure that in case of eventualities, all financial obligations, like child’s marriage, education and loan repayments, will be taken care of.
   
   
   6.    Can I cover my kids and parents under personal accident policy?
   Yes, you can cover your unmarried children and parents up to 21 years and 80 years respectively.
   
   
   7.    Is there any age-limit for personal accident policies?
   Personal accident insurance policies can be bought by any individual in the age group of 18-65 years.
   
   
   8.  I am a housewife who spends most of her time at home. Do I also need to buy a personal accident policy?
   Yes, you should buy a personal accident policy even if you seldom come out from your house. Accidents can happen to anyone, irrespective of age and occupation. Being a house maker doesn’t give you an extra shield against accidents. Therefore, even if you are a housewife, you should buy a personal accident policy which covers a number of eventualities, including road and air accidents, natural calamities and even a slip in the bathroom.
   
   
   9.  Does the policy cover daily sickness and natural death?
   No, this policy only covers natural death.
   
   
   10. Is there any additional benefit offered by the policy?
   In addition to accidental coverage, your accident policy also offers various benefits, such as:
   ·         Legal and education benefits
   ·         Child education allowance
   ·         Ambulance expenses
   ·         Terrorism and acts of terrorism
   
   
   11. I frequently travel to different nations for business and leisure purpose. Will the policy cover me for accidents occur in a foreign land?
   Yes, the policy will cover you even if you are in a foreign country. A typical personal accident policy offers worldwide coverage. However, the claim needs to be submitted in India, which will be settled in Indian currency only.
   
   
   12.  When does my personal accident insurance start?
   The policy will commence 15 days from the date of receipt of duly-filled insurance form and premium payment.
   
   
   13. Can I nominate my minor child to receive benefits in case of mishappening of the event?
   Yes, you can nominate your kid who will be entitled to get benefits in case of your accidental death. However, if your child is minor, you will need to appoint a guardian also who will receive benefits on behalf of your kid.
   
   
   14. When I already have life and health insurance policies, why should I go for a personal accident policy?
   It is good to have a life insurance to secure the future of your family in your absence. Also, you have made a right move by buying a health insurance policy to cover hefty medical expenses in case of medical treatment. But it is imperative to buy a personal accident policy also which plugs a major hole in your insurance portfolio. Firstly, it offers financial coverage to the family if the policyholder becomes disabled after an accident. Secondly, the policy offers compensation, irrespective of the magnitude of the mishap. It means, even minor ones, like breaking an arm, falling off a bicycle and slipping in a bathroom are covered under the policy.
   
   
   15.   Can I buy the policy for a longer duration?
   Generally, insurers offer personal accident policies for maximum one year. However, some policies are also offered for a longer tenure. For instance, ICICI Lombard’s PersonalProtect is available for a period of 1, 3 and 5 years.
   
   
   16.   Is there any specific type of events which are not covered under the policy?
   Most of the insurance policies do not offer coverage in the following situations:
   ·         Attempted suicide or suicide, self-injury
   ·         Accidents happen under the influence of drugs and liquor
   ·         Childbirth or pregnancy related complications
   ·         War, invasion, hostilities and many more
   It is not an exhaustive list, so please check the policy wordings for more information on exclusions.