Personal Accident

Importance of Personal Accidental Insurance

Accident can happen to anyone irrespective of the time or place. Its impact on the that person’s life or those dependent on him/her can vary from small to big, permanent to temporary. Nobody is sure whether he/she will reach at home safely or not, in such types of risks Personal Accidental Policy can be helpful

Life insurance ensures your family’s financial goals in your absence. A health insurance plan will ensure health care for you and your family.

We feel that if we have adequate life and health insurance, our finances and the financial goals are protected. But what happens if Total or Partial Disablement arises due to an accident or an illness? It effects on your income at the level before accident. Life Insurance does not cover such an event. Health Insurance covers only hospitalization expenses.

There is a gap, which is not covered by Health and Life Insurance in such case a Personal Accident Cover plays an important role to cover this gap. Personal Accident Insurance plans offer very limited coverage but it fills the gap which does not covered under Life Insurance and Health Insurance.

What is a Personal Accident Insurance?

A personal accident Insurance covers losses and damage to the insured in an accident.

A personal accident policy covers Accidental death, Permanent Total Disablement, Permanent Partial Disablement and Total Temporary Disablement due to an accident.

Personal accident Insurance does not cover if person dies or gets totally or partially disabled through a natural illness, such disability (or death).

A personal accident policy covers following events caused by an accident:

  1. Death or Injuries
  2. Permanent Total Disablement
  3. Permanent Partial Disablement
  4. Total Temporary Disablement

A personal accident plan may or may not cover all of the above. Person should read the terms and conditions in the policy wordings carefully.

Meaning of Accident:

As per IRDA Guidelines on Standardization in Health Insurance, 2013 An Accident is a sudden, unforeseen, involuntary event caused by external and visible means. This is standard definition of “Accident”. Personal accident policies have same definition of an “Accident” as per IRDA Guideline.

As per aforesaid IRDA guidelines, “Injury” means physical body harm excluding illness or disease solely and directly caused by external, violent, visible and evident means which is verified by a medical practitioner.

It is clear that injuries and damages or even death that happen due to natural causes or perhaps even due to negligence will not be covered under a personal accident policy.

IRDA has no standard definition for the extent of damage to your body to be classified as total or permanent disability. You must have to refer policy wordings to understand the exact definition.

What does Personal Accident Policy Cover?

Personal Accident Policy is a defined benefit policy, on occurrence of an insured event; the insurance company pays Sum Insured as defined under the policy to the insured. Critical Illness Plans are also defined as benefit plans. There is no relation to hospitalization expenses. This is in distinction to regular health insurance plans, where only the hospitalization expenses are covered.

For example, if the Sum Insured is Rs 20 lacs, on permanent total disability, the insurer will pay you Rs 20 lacs. On the other hand, in case of permanent partial disability, it may pay you Rs 10 lacs (50% of Sum Insured). The payout is irrespective of the hospitalization expenses incurred.

Certain personal accident policies may provide additional benefits such as

Emergency Ambulance Cover, Transportation of Mortal Remains, Education Fund Benefit, Family Transportation, Accident Medical Expenses and many more.

Different Exclusions are always there in every policy they may be like below.

  • Self-inflicted injury, suicide or attempted suicide or abuse of intoxicants or hallucinogens including drugs and alcohol.
  • Participation or involvement in naval, military or air-force operations, racing, diving, aviation, rock or mountain climbing, any breach of law with criminal intent.
  • War or any act of war, act of foreign enemy, public defense, rebellion, revolution, insurrection, military or usurped acts, chemical, radioactive or nuclear contamination.
  • Pregnancy or childbirth or its complications, congenital internal & external diseases, HIV/AIDS, sexually transmitted diseases, Pre-existing conditions & their complications.

Hence before buying personal Accident Policy always be careful and read all wordings, terms and conditions of policy.

Documents required for Claim

  1. Claim form
  2. Police Panchnama / FIR / Post mortem report / Death certificate, if applicable
  3. Disability/medical certificate from the treating doctor.
  4. Leave certificate from employer in case of total temporary disability.

For exact list of documents, please read the policy document carefully.

Tax Benefits for Personal Accident Insurance Plan

There is No tax benefit for the premium paid for personal accident plan.

In the case of insured gets permanent total disability, the amount should be enough:

  • To Maintain family lifestyle
  • To Meet all financial goals
  • To Cover own expenses like home treatment, physiotherapy, nurse expenses etc

A personal Accident plan covers four events due to an accident are Death, Permanent total disability, Permanent Partial Disability and Total Temporary Disability.

If you have sufficient Term Plan, Life Insurance and Health Insurance then only following point you should kept in mind because

  • Death of the Insured in an Accident covered under term Plan and Life Insurance,
  • Hospitalization Expenses covered under Health Insurance
  1. Total Temporary Disability: This can lead to loss of income since you won’t be able to take up employment for a few weeks or months.
  2. Permanent Total or Partial Disability: This is the situation where a personal accident plan can fill an insurance gap and add value to your insurance portfolio. Such disability can compromise your ability to earn money at the level before accident. In many cases, the ability may be compromised completely. You need risk coverage for such cases.

And if not sufficient Term Plan and Health Plan than

  1. Death in an Accident and
  2. Hospitalization Expenses Should be kept in Mind.