- Date : 06/12/2021
- Read: 4 mins
A life insurance policy or health cover won’t provide adequate financial security in case of an accident.
According to the World Bank, India accounts for 11% of all road accidents globally - the highest in the world - owning merely 1% of the vehicles on its roads. And it could get worse.
As per data from Statista, sales of vehicles in India (two-, three-, and four-wheelers) have been steadily rising since 2011 -from 15.5 million to over 26 million in 2019, before the pandemic brought businesses to a stop. But with the Indian economy back on track, sales are likely to pick up.
On the flip side, road accidents could rise exponentially. This is where personal accident insurance or accident covers come in.
It is often assumed that a life insurance plan or a health cover provides an adequate financial safeguard in the event of an accident. They do not, as victims or their families come to realise later. In most cases, with these products, there is no protection against events such as mishaps at work, accidental loss of life, or the loss of the ability to earn an income.
In such cases, neither the life insurance policy or health insurance plan will provide monthly income, lump sum money for future living expenses. This is where a personal accident with disability cover will come to the policyholder's rescue.
What is a personal accident cover?
With personal accident cover, the insurer pays a benefit amount to the policyholder or their nominee if the latter dies in an accident, loses the use of their limbs, or is disabled.
When calculating the premium for this kind of insurance policy, age and income are not as critically important as they are with life and health covers. Here, what matters are the amount of exposure to risk at work and the nature of the policyholder’s occupation.
However, it is still advisable to get a personal accident cover before you enter your 30s, especially if you are married or have dependents. After all, an unfortunate accident can render you incapable of earning, which can affect the future of your children. Listed below are some specific cases where a personal accident cover becomes important.
Related: Do Not Skip Accidental Death Benefit Rider
- Accidental death: If the policyholder dies in an accident, their nominees or dependants will be paid a death benefit to cover them against financial insecurity.
- Permanent total disability: If an accident leaves the policyholder totally disabled and beyond the scope of healing with doctoral care, they will be paid a benefit as per the insurer’s guidelines. The claim can be made within a year of the accident.
- Permanent partial disability: If an accident leaves the policyholder partially but permanently disabled and beyond the scope of healing with doctoral care, they will be paid a benefit as per the insurer’s guidelines. Do note that partial disability can prevent a person from earning a regular income.
- Temporary total disability: Some plans compensate for total disability on a temporary basis due to an accident, signifying that with medical help, the policyholder can recover and regain their original productive capacity. The compensation can cover interim loss of income.
- Dismemberment: A policyholder can lose their arms, legs, fingers, toes, eyes, etc., due to an accident. This can render them incapable of earning. Many policies have benefit payouts for such cases.
- Burns: Generally, insurance companies offer this as optional extra coverage. The coverage is extended to possible death or dismemberment due to burns, which may be caused by fire as well as by chemicals and other means. The treatment cost is reimbursed after hospitalisation.
- Educational grant: Many personal accident plans extend education grants to victims or their dependents. When applicable, the insurer pays an additional amount so that the tuition fees of the policyholder’s children or dependents can be cleared.
According to the World Bank, India accounts for 11% of all road accidents globally - the highest in the world - owning merely 1% of the vehicles on its roads. And it could get worse.
As per data from Statista, sales of vehicles in India (two-, three-, and four-wheelers) have been steadily rising since 2011 -from 15.5 million to over 26 million in 2019, before the pandemic brought businesses to a stop. But with the Indian economy back on track, sales are likely to pick up.
On the flip side, road accidents could rise exponentially. This is where personal accident insurance or accident covers come in.
It is often assumed that a life insurance plan or a health cover provides an adequate financial safeguard in the event of an accident. They do not, as victims or their families come to realise later. In most cases, with these products, there is no protection against events such as mishaps at work, accidental loss of life, or the loss of the ability to earn an income.
In such cases, neither the life insurance policy or health insurance plan will provide monthly income, lump sum money for future living expenses. This is where a personal accident with disability cover will come to the policyholder's rescue.
What is a personal accident cover?
With personal accident cover, the insurer pays a benefit amount to the policyholder or their nominee if the latter dies in an accident, loses the use of their limbs, or is disabled.
When calculating the premium for this kind of insurance policy, age and income are not as critically important as they are with life and health covers. Here, what matters are the amount of exposure to risk at work and the nature of the policyholder’s occupation.
However, it is still advisable to get a personal accident cover before you enter your 30s, especially if you are married or have dependents. After all, an unfortunate accident can render you incapable of earning, which can affect the future of your children. Listed below are some specific cases where a personal accident cover becomes important.
Related: Do Not Skip Accidental Death Benefit Rider
- Accidental death: If the policyholder dies in an accident, their nominees or dependants will be paid a death benefit to cover them against financial insecurity.
- Permanent total disability: If an accident leaves the policyholder totally disabled and beyond the scope of healing with doctoral care, they will be paid a benefit as per the insurer’s guidelines. The claim can be made within a year of the accident.
- Permanent partial disability: If an accident leaves the policyholder partially but permanently disabled and beyond the scope of healing with doctoral care, they will be paid a benefit as per the insurer’s guidelines. Do note that partial disability can prevent a person from earning a regular income.
- Temporary total disability: Some plans compensate for total disability on a temporary basis due to an accident, signifying that with medical help, the policyholder can recover and regain their original productive capacity. The compensation can cover interim loss of income.
- Dismemberment: A policyholder can lose their arms, legs, fingers, toes, eyes, etc., due to an accident. This can render them incapable of earning. Many policies have benefit payouts for such cases.
- Burns: Generally, insurance companies offer this as optional extra coverage. The coverage is extended to possible death or dismemberment due to burns, which may be caused by fire as well as by chemicals and other means. The treatment cost is reimbursed after hospitalisation.
- Educational grant: Many personal accident plans extend education grants to victims or their dependents. When applicable, the insurer pays an additional amount so that the tuition fees of the policyholder’s children or dependents can be cleared.
