You already hold an adequate life and health cover to seek protection from the vagaries of life. However, there is a missing puzzle piece that you need to fit to secure your family’s long-term financial future.
Stressed modern-day lifestyles and the rat-race to get one step ahead have vastly increased accident rates in India. Our country holds the infamous record of the highest number of road accidents in the world. Thus, it is imperative that the breadwinner is insured against the financial risk of accidents.
The Value of a Personal Accident Rider
Remember your life Insurance policy will typically cover the event of your untimely demise including by way of accident. However, an unfortunate event like a fatal accident restricting your earning capability will not be covered by your life insurance policy. Such a misfortune could jeopardize your long-term financial future. This is where the role of a personal accident rider comes in. Under the same life policy, you will be covered for financial losses arising due to accidental death or disability. And all this is made possible by a small amount of additional premium.
Risks Covered in a Typical Personal Accident Rider
Broadly, the personal accident rider in a life insurance policy protects against the financial risk of accidental death and disability.
- Accidental Death
- Total Permanent Disability
- Permanent Partial Disability
- Temporary Partial/Total Disability
Aside from the above four, some personal accident riders also cover hospitalization expenses due to accidental injury and loss of income risk too.
Comprehensive Accident Coverage
The important point to note is that the magnitude of the accident does not matter. From a road accident to falling from stairs and fracturing a leg, everything is covered under this rider. Even by playing cricket if you injure yourself, resulting in temporary/permanent disability, the accident rider comes in handy.
Benefits Received if the Misfortune of Accident Strikes
Accidental death benefit - 100% of sum assured to the nominee or beneficiary is paid in case the accident results in the death of the insured.
Total permanent disability benefit - Insurers generally pay the whole sum assured or even 100% of sum assured if an accident leads to total permanent disability such as loss of limbs or eyesight.
Permanent partial disability benefit - In this case, a certain percentage of sum assured such as 10 %, is paid for a particular period, or a lump sum payment such as 50 % of sum assured is paid. This includes cases such as loss of one limb, loss of a finger, loss of one eye, loss of speech, etc.
Temporary/partial total disability benefit - If an accident temporarily curbs the insured’s earning capacity i.e. for weeks or months, the personal accident rider pays a percentage of sum assured such as 20% or a fixed payment lasting for few weeks. This includes cases such as a fractured leg.
Your Personal Accident Rider won’t usually 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
How to Pick Your Ideal Personal Accident Rider Cover
As a thumb rule, your personal accident cover 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.
The personal accident rider should be enough to help the family maintain their existing lifestyle, fulfill all their financial goals considering the loss of income due to the accident, and cover all your post-accident expenses such as home treatment, etc.
Unlike life and health policies where your age dictates the premium, that under personal accident insurance is determined by the nature of occupation considering the risk level of your job and working conditions. The minimum age for this rider is typically 18 years.
Make a Choice. Save Your Family from Financial Crisis
An accident can impair an individual’s earning ability, leaving family members vulnerable. While we can take all the safety measures to prevent accidents, sometimes they are unavoidable.
Equipping yourself financially for such an eventuality is the smart thing to do. Don’t forget to enhance your life coverage by opting for a personal accident rider.