In an interview to CNBC-TV18 Harshvardhan Roongta of Roongta Securities explained the importance of taking an accident cover and answered personal finance queries.

Q: What is your take, is accident cover something that one should go ahead with even if you have a life cover?

A: Absolutely. In the year 2009, about 486,000 accidents were reported in which resulted into death of 125,000 people and 515,000 people were reported injured in these accidents. If you go further into the data, we see that one accident is taking place every minute, so while we are speaking now there is one accident that has taken place in the country somewhere which may have resulted in injury or death. 

From four accidents, one is going to result into death. About 25% of accidents result into death. In terms of financial planning we are talk about protection and making provisions for your loved ones. I am talking about a situation where 25% people – those who have passed away because of an accident have hopefully taken life insurance.

Q: How much will it cost?

A: If I talk about Rs 1 crore cover the cost is going to about Rs 12,000 per annum which is just about Rs 1,000 a month.

Q: Should accident cover be a part of insurance policy or standalone?

A: If you want to insure all your family members you have to separately insure them. You can have one document in which all the members can be insured. But you need to make sure that everybody is covered individually.

I would suggest taking a standalone personal accident policy offered by general insurance companies. General Insurance companies are those which offer medical claim, New India Assurance, Oriental - those kinds of companies who are not into life insurance business.

The cost is almost similar to, if you take a rider with your life insurance policy, but the scope of coverage is far more elaborate in case you take it from a general insurance company. 

Example, say a person has covered himself of cover a Rs 1 crore of policy – now in case of accident which leads to death he does get Rs 1 crore payout. If that accident does not result into death, but results into a permanent disability, he also gets Rs 1 crore in his own hand.

If there is a partial disablement, he gets 50% of the insurance coverage which in this case would be Rs 50 lakh. If he is not permanently disabled, but he is bed ridden for about three months or six months in that case also there is loss of income. So, he gets about Rs 3,000 a week and that benefits extents upto 100 weeks or when he recovers whichever is earlier.

A person should consider an accident cover for a simple reason – while you buy life insurance policy for the benefit for your loved ones, you should buy accident cover for your own self. In case if you meet with an accident, but are completely disabled there is loss of income equivalent to not having you around.