Life is truly unpredictable. One moment you may be living it up and the next moment you may meet with an accident. Accidents can happen at any time and anywhere. Unfortunately, accidents do not give you prior warnings. The statistics of accidents in India are very alarming. As per data from the Ministry of Road Transport and Highways, deaths due to road accidents in India increased to nearly 1.49 lakh in 2018 when compared to the data of 2017. A total of 4.61 lakh accidents took place in 2018. Uttar Pradesh registered the maximum number of fatalities.
Any such tragedy can leave your finances in the lurch. That’s why it recommended getting a personal accident insurance policy. The accident insurance policy provides financial assistance to the insured and the beneficiaries in case of accidental death and bodily injuries. Additionally, such policies also provide hospitalization cover, hospital confinement allowance and medical expense cover.
Types of Personal Accident Insurance Policy
There are two variants of personal accident insurances:
Individual accident insurance: This accident insurance policy provides insurance benefits to an individual in case of any accidental damage. Typically, the insurance covers accidental death, loss of limbs or sight, or other permanent disabilities resulting due to an accident. This is best for self employed, salaried persons and persons who are engaged in a business. Certain insurers also provide education benefit as part of the policy. In case of death or a permanent total disablement claim, the child is eligible to receive support for education at a government approved educational institute.
Group Accident Insurance: This personal accident insurance is often obtained by employers to obtain coverage for the employees. These policies are good incentives for small enterprises as the cost of obtaining them is very low. Group accident insurance only provides limited benefits when compared to an individual accident insurance plan. However, most insurers provide complete cover in case of death or temporary partial disablement or permanent total disablement of the insured due to accidents occurring anywhere in the world.
Features & Benefits of personal accident insurance policy
Before you decide to get a personal accident insurance, it is useful to understand the key features and benefits of such policies.
This policy provides cover in case of unfortunate event of death of the insured due to an accident. The nominee is entitled to the entire sum. The policy even provides cover for permanent total disability, permanent total disability, permanent partial disability and temporary total disablement. Another interesting feature of a personal accident insurance is that it also provides cover in case of temporary total disablement. Certain policies also provide cover the hospitalization due to any accident as well the cost of transportation of mortal remains in case of death.
In addition to the above, many policies also provide a cover for dismemberment of any kind that happens due to accident. Certain insurers have predefined percentages and ratios in which the benefit will be payable to policyholders who suffer dismemberment of any organ such as limbs, hands, eyes, ears etc.
Another optional coverage provided by certain insurers is the cover for the possible death or dismemberment on account of burns. Burns can be caused due to chemicals or fire, especially if the policyholder works with hazardous chemicals. If the policy holder suffers any burns, then the cost of the treatment of the burns will be covered under a policy for personal accident insurance.
How to Buy Best Personal Accident Insurance Online
If you are in the market to buy an insurance policy, you will be truly spoilt for choices. There are several portals online which serve as the marketplace for finding the right insurance policy. These are essentially insurance aggregators. These portals are registered with Insurance Regulatory and Development Authority, the insurance sector regulator in India. These marketplaces or portals offer you a host of options. You need to provide certain basic details such as the cover that you are looking for and the premium you wish to pay. It also allows you to compare the policies offered by several insurers which in turn help you to decide which the best policy to go ahead with is. Some portals even offer attractive discounts on the payment of premiums. Instead of contacting several brokers, you can now easily glance over many policies with just a click of your mouse button. Many portals are also available as an application on your phone. So buying insurance policy online is easier than ever before.
What are covered and not covered in personal accident insurance policy
One of the questions on your mind would be the type of coverage offered under a policy for personal accident insurance. Typically, most policies will provide you the following inclusions:
- Accidental Death Cover: Death due to an accident can be one of the most devastating things for a family. In the event of death, the entire sum assured is paid to the nominee.
- Permanent/Total Disability Cover: In some cases, accidents can result in permanent disabilities or lifelong total impairment. These impairments could be in the nature of loss of both the limbs and hands. In case total disability, a specified sum insured is paid to the insured.
- Permanent Partial Disability Cover: It is also possible that the injuries sustained during an accident result in permanent partial disabilities. In such cases, a certain amount of the benefit is paid to the insured.
- Temporary Total Disability: Disabilities can also be temporary. If the insured sustains temporary disabilities, a different type of benefit is provided. Typically, the insurer will provide a weekly allowance to recompense the loss of income. This cover is helpful for the loss of income sustained by the insured.
Other common inclusions are: Medical expenses/ hospitalization charges, Child education support, life support benefit etc.
But this does not mean that everything under the sun is covered by these policies. There are exclusions as well. Common exclusions include:
|· Pre-existing disability or injury|
|· Hospitalization charges in case of suicide or self-injuries|
|· Suffering any injuries when under the influence of intoxicants|
|· Suffering any injuries due to the commission a criminal act or being involved in war activities, suffering from a mental disorder|
|· Accidental dismemberment during childbirth or pregnancy|
How to claim personal accident insurance plan
The process to initiate a claim under a personal accident insurance is straightforward. We have set out below the process you must follow to make a claim:
First step should be informing the insurance provider within the specified time frame. The time frame is specified in your policy document. Typically, you would be expected to inform your insurer as soon as you can. You would be issued a claim reference number. This number should be quoted when you are communicating with your insurer. Additionally, the following information is required to be provided:
- Your contact number
- Policy number
- Date and time of the accident
- Name and contact details of the insured person who is injured
- Location of the incident
- A brief description of how the accident/ loss took place with its location details
- Extent of the loss
Death during an accident is also covered under a policy for personal accident insurance. It is important to keep your family informed of the policy terms. Death of a loved one can leave the family devastated. Prior information about insurance policies and terms etc. would be helpful. Further, in case of a death, the death certificate, FIR and the post mortem report, if any, has to be submitted. If your claim is on the grounds of impairment, you would have to submit your medical report and hospital bills as well.
Tax Benefit of Personal Accident Insurance Plan
If you are buying an insurance to save on tax, don’t. Tax benefits should not guide your decision. After all, a policy for personal accident insurance is a cushion for any unforeseen events. Specifically, Section 80D of the Income Tax Act 1961 does not provide any tax benefit for the premium paid for personal accident insurance plans. The benefit is not extended for any coverage – whether accidental death or permanent or temporary disabilities.
However, keep in mind that there are ways to enjoy tax benefits. One can claim the cost of a premium on the insurance against loss of income. Claiming the tax benefits on insurance premium can be a complicated process. It is advisable to consult a good chartered accountant. You can enjoy the benefits if you demonstrate that premium is paid to protect taxable income.
If you opting for a personal accident insurance which is combined with another policy, tax treatment and availing tax benefits can be difficult.
If I meet with an accident outside India, will the personal accident insurance policy cover me?
Typically, all policy for personal accident insurance offer global coverage. Even if you meet with an accident while travelling overseas, you will be covered. It’s always advisable to check the policy terms carefully.
Why do I need an additional policy for personal accident insurance when I already have a life insurance policy and a mediclaim policy?
It is important to understand the differences between a mediclaim insurance policy, life insurance policy and a personal accident insurance policy.
In case of a life insurance, the benefits are available to your nominee only when you pass away. A mediclaim policy is only available to cover the hospitalization and other medical expenses. However, a personal accident insurance is much more comprehensive. It protects the financial risk due to accidental permanent total disability or accidental death of an earning family member.
You consider a personal accident insurance as a policy which strengthens your financial portfolio. It secures the future of your family members especially if you are the only earning member.
What is the difference between a life insurance policy and a personal accident insurance?
Personal accident insurance is for insuring the loss of life or disabilities arising from accidents. Life insurance on the other hand pays out the nominee in case of the death of the policy holder, irrespective of the cause of death (other than suicide attempts). The key differences between a life insurance and personal accident insurance are set out below.
- Cover: Life insurance cover is available when the death is due to natural causes (excluding suicidal attempts). A personal accident insurance is to offer compensation where the death of the policyholder is due to an accident.
- Conditions: In case of a life insurance policy, the cover is available even if the insured dies months or years after the illness. In contrast, for a personal accidental insurance, the cover is offered if the insured dies due to an accident or within a specified period of time after the accident. The time frame is usually 180 days from the accident.
- Plan Options: There are a variety of plan options available when it comes to life insurance policies. The factors depend on the long and short term financial investment goals. However, in case of an accidental insurance policy, the cover is limited to the loss or damage resulting due to an accident.
- Partial Disability Cover: partial disabilities are not covered under a life insurance policy. However, personal accident insurance specifically covers the same.