Accidents can cause disability, bodily injury and in the worst case - death. Such an incident can financially wreck a family. A Personal Accident Rider is to safeguard your family against such an event.
Last summer, Amit met with an accident. Luckily, Amit survived, but he had to be hospitalised for more than six months! This stalled his income flow.
More than his recovery, he worried about how his family would manage their monthly expenses.
His Health Insurance policies only covered his medical expenses. It was of no help for the loss of income he was facing for the next six months!
Amit had to manage everything on his own, somehow. His options weren't looking good - Asking friends for help? Take a personal loan?
Amit could have been wiser like you. He could have added a Personal Accident cover to his core life insurance plan as a rider.
Personal Accident Rider
A typical life Insurance policy gives a lump sum amount to the next of kin in case of untimely death of the insured. This includes accidental death.
Loss of income due to disability or inability to work is not covered.
However, if you add a Personal Accident Rider to your Life Insurance policy - you can cover such losses too.
You can add Personal Accident Rider by paying an additional small amount while purchasing your life insurance policy.
Personal Accident Rider Covers:
- Accidental death benefit -
If an accident results in death of the insured person, 100% of the sum insured is paid to his nominee / beneficiary.
- Total permanent disability benefit -
Insurers generally pay 100% of sum assured if an accident leads to total permanent disability - such as loss of limbs or eyesight.
- Permanent partial disability benefit -
Sometimes an accident can result in Permanent partial disability, such as - loss of one limb, loss of a finger, oss of one eye, loss of speech, etc.
In such cases, a certain percentage of sum assured is paid for a specific term.
Ex: 10% of the sum insured is paid for 5 yrs. Or in some cases, 50% of sum insured is paid up in lump sum.
This depends on the nature of the injury.
- Temporary/partial total disability benefit -
An accident can also temporarily effect your earning capability - like in case of Amit, where he was unable to work for 6 months.
In such cases, the insured gets a fixed payment lasting for few weeks / months. This is usually around 20% of your sum assured.
This also includes cases like getting your leg fractured and hence not being able to go to work.
Personal Accident Rider does not cover:
• Self-inflicted injury or injuries sustained due to attempted suicide
• Participation in hazardous sports, war, civil commotion, terrorism, strike, riot, criminal activity
• Any Hazardous occupation
• Influence of drugs/alcohol
Benefit of a Personal Accident Rider
• A Personal Accident Rider covers you as long as your Life Insurance is active. Which is usually 10 to 30 yrs, depending on the policy.
• The premium of a life insurance policy is locked when you first buy. So, the cost of a personal accident rider is fixed for the entire policy term.
• The nature of the accident does not matter. From a road accident to falling from stairs and fracturing a leg, everything is covered under this rider.
Pick Your Ideal Personal Accident Rider Cover
• As a thumb rule, a personal accident rider should be enough to help the family maintain their existing lifestyle in case of a loss of income. Better yet, should also have some buffer, to cover all your post-accident expenses such as home treatment, etc.
• Which means, a personal accident rider should be at least equal to your life insurance cover. So, if your life cover is Rs. 1 crore, then the sum assured under the personal accident rider should be at least Rs. 1 crore too.
• The premium for a personal accident rider is determined by the nature of your occupation. This considers the risk level of your job and working conditions. Higher the risk, higher is the premium.
Ex. A worker working in mines will have higher premium to pay than a dentist.
Better be safe than to be sorry.
Accidents by definition are unexpected. While one can take all the safety measures to prevent them for happening, they still occur all around us.
It's a smart move is to have a shield for such an outcome. We highly recommend you to opt for a personal accident rider when buying a life insurance plan.