Last Updated : Aug 11, 2015 11:07 AM IST | Source:

Here is why you should not ignore personal accident cover

Personal accident cover offers coverage in case of accidental disability and accidental death. It ensures a certain lifestyle for the individual covered, in case the earning ability is compromised due to an accident.

Saroj Satapathy
Ideal Insurance Brokers

After investing in a sound life and health insurance policy, Sumit was more than rest assured about the comfortable future of his family, in case something happened to him. He had a beautiful wife who worked as a teacher for a primary school and an equally beautiful daughter. His daughter was 3 and went to a kindergarten. Sumit himself worked as an experienced marketing personnel in an FMCG company. Sumit’s family was complete and happy. They went for regular holidays and life seemed like a blissful cruise for Sumit.

Little was Sumit aware that unfortunate incidents strike without a warning. One fine evening getting late at work, Sumit called up home and informed. At about 12am when he was on his way back, secure in his car, another car struck him head on at the sharp right turn. Sumit woke up in the emergency ward of the hospital. His legs crippled forever! His health policy took care of his recuperation and the hospitalization bills. However, his life policy was of no avail. His future was bleak as with no hope to be able to resume regular work, a cushion for the regular income was gone. His daughter’s future was bleak!

Only if Sumit had opted for the personal accident cover, he could have avoided this situation. He would have been able to secure his future earning and daughter's future. A personal accident cover as a rider with the life policy or under a general insurance policy covers the individual during accidental death and also covers an individual’s physical disability, a case which leads to loss of earning capacity.

A personal accident cover is recommended for all individuals, including housewives. What more, children between the age group of 5 to 18 can also be covered under this policy. According to the thumb rule your personal accident death cover should be 100 times of your monthly income. So, for instance your monthly income is INR 10,000 then your personal accident cover should be INR 10,00,000. Then in case of any unfortunate incident your family can invest INR 10,00,000 in any fixed deposit scheme and draw a regular income.

The sum assured and benefits can vary with companies. For instance, New India Assurance, restricts the capital sum insured to 72 months income from gainful employment. This would mean that the individual’s income from other sources like, stocks, shares, property etc. would not be considered. HDFC ERGO’s Accident Protection Plan, would cover the accidental death, temporary or permanent injury. It also covers the expenses arising due to broken bones and funeral costs. Due to the difference in the covers it is recommended to the individuals to read the policy documents carefully before taking the final decision.

The features of the personal accident cover include accidental death, permanent total disablement, permanent partial disablement and temporary total disablement. The elaborations of all the features is well defined clearly in the policy document. In short:

• Death: In case of the death of the individual, the entire sum assured (100%) is paid to the nominee of the policy. Some insurers have clauses here too, for instance the death should have occurred within 15 days of the accident.
• Permanent Total Disablement: This means irrevocable or permanent loss of the body part or paralysis, whereby the individual is unable to earn for life. Depending on loss of limb or body part the percentage of sum assured is defined in policy. Some insures may offer 125% or 110% of the sum assured in such cases.
• Permanent Partial Disablement: Permanent loss or disability in either of the limbs or any one organ like amputation of a finger or loss of hearing in an ear. In such cases sum assured is paid in a small percentage as mentioned in policy document.
• Temporary Total Disablement: This situation means that an individual is unable to work for a specific period. Total disablement for a temporary period, for example, fractured limbs (legs and hands), bed rest for a few months or any other situation. A percentage of the capital sum insured subject to a maximum limit is paid for a specific number of weeks sometimes it goes for 104 weeks.

There are certain situations where the individual would not be able to avail the benefit. You need to examine the coverage and exclusion through your advisor/intermediary before going in for the policy. Considering the current life style, personal accident policy is highly recommended for all young people of today as it is comparatively cheap and affordable. There are lot of riders and add on cover available for the same which need to be examined before buying.
First Published on Aug 11, 2015 11:07 am