Deepak Yohannan
MyInsuranceClub.com

Accidents can occur unexpectedly in our daily lives. At our work place, home or on the road, they may strike anytime causing death or severe disability. To compensate and provide financial support at such traumatic times, a personal accident insurance policy may be an ideal answer. It provides a lump sum amount to your family, taking care of the immediate financial requirements that may arise.

The Need for Personal Accident Insurance

The need for a personal accident insurance cover stems from the fact that a life insurance cover offers financial support only in case of death. An accident however could render you disabled resulting in a temporary loss of income or job, plus an additional burden of recurring medical expenses. A personal accident insurance not only compensates for death, but also towards disability caused in the event of an accident. It reduces financial constraints that may arise due to loss of income.

What does it cover?
The scope of coverage and type of disability covered in a Personal Accident Insurance vary from insurer to insurer. Where some offer a very basic cover of only accidental death, few others have a comprehensive option covering death and disability (permanent and temporary).

• Accidental Death Cover: Protects against death caused in the event of an accident. 100% of the sum assured would be paid to the nominee. Most insurers specify that the death should have occurred within 15 days of the accident; otherwise it would be attributed to some other cause.
  
• Permanent Total Disablement cover: A permanent disability refers to absolute and irrevocable loss of a body part or paralysis, causing inability to work and earn an income. 100% of the sum assured is paid out in such cases to the policy holder.
  
• Permanent Partial disablement: This refers to permanent loss or disability due to an accident, of either one limb or organ, or a body part. In such cases, the sum assured is paid out in small percentages on a weekly or monthly basis, up to a specified number of weeks.
  
• Temporary Total Disablement: This refers to a total disablement for a temporary period such as fracture of legs or a dislocation that result in temporary loss of income. A percentage of the capital sum insured subject to a maximum limit is paid for a specific number of weeks.

When such accidental injuries occur, insurance companies seek a certificate from a qualified medical specialist, stating the nature of injury, whether it is permanent or temporary. Only then shall the disability deemed to be covered by the policy.

What the policy does not cover
A personal accident insurance policy provides cover in case of any death, disablement or dismemberment that has been caused in the event of an accident. The policy covers only such injuries that have been inflicted by externally. Self inflicted accidents are not insured by the policy. Other exclusions of the policy are as below.

• Suicide
  
• If under the influence of intoxicating liquor or drugs
  
• Accidents that have occurred by breach of law with criminal intent
  
• Aircraft pilots and crew , Armed Forces personnel and Artistes engaged in hazardous performances
  
• War and related perils
  
• Riots and crimes
  
• Pregnancy Claims

Points to keep in mind

• Personal accident policies are pretty reasonable and available at low premiums.
  
• Open to a wide range of individuals with the age group for insurance ranging from 5 years to 70 years.
  
• Personal accident insurance policies do not offer any tax benefit on the premium
  
• The policy may offer additional benefits such as funeral expenses and daily hospital cash allowances.
  
• Available as a standalone policy and as a rider. However riders may be limited in their coverage. Some insurance companies do not offer protection against loss of income in riders.
  
• Policies are generally for duration of a year, and have to be renewed subsequently.

Should You Buy?
If you are continuously on the move, and your job requires you to travel extensively, by road or other means, you are exposed to the risk of an accident. A personal accident policy would defiantly make a complete protection tool against accidental risks, assuring financial support in case of death or disability. Do not consider a personal accident insurance as substitute for a life insurance policy. Nor should it be avoided because of its lack of tax break or maturity benefits. The plan works best when opted along with a life insurance policy, giving you overall risk protection.

The author is CEO of MyInsuranceClub.com