The devastating floods in Chennai last December played havoc with the lives of the people of Chennai and opened our eyes to the scale of destruction that nature can cause. People lost their lives, many became homeless and countless others were seriously injured.
In this gloomy scenario, insurance was the only silver lining that provided some hope to the affected people by helping them recoup the losses they had suffered. The life insurance policies paid families of the deceased while health plans compensated the hospital bills incurred on the sick. On the other hand, home insurance plans or content insurance plans (if they had one) took care of the losses incurred on their damaged houses.
But how does personal accident insurance come into the picture here? Does it provide relief in such an eventuality? Let’s find out!
The need for a personal accident cover
Most of us are so obsessed about insuring ourselves with a life or a health insurance policy that we do not see the importance of a personal accident policy. During the Chennai floods, life insurance policy compensated for death and health insurance compensated for the hospital bills. But, who took care of the financial loss due to accidental injury, resulting in temporary or permanent disability?
A personal accident cover is important as it can cover you from physical injuries due to an accident.
Imagine yourself to be the sole bread-winner of your family. Whether you are salaried or self-employed is secondary. Suddenly, due to a major accident, you are rendered immobile and unable to work. As a result, your flow of income halts and your hapless family finds it difficult to meet day-to-day expenses. If that wasn’t any less, then you and your family even have to bear expenses required for the treatment of your injuries.
A health insurance plan would only provide for your hospital bills. While some may even offer a limited scope for domiciliary expenses.
But, a personal accident policy covers even those expenses, which are not paid by your health insurance plan. Hence, it plays a vital role in serving as a comprehensive insurance cover.
The plan covers the following scenarios:
1. Accidental Death:
Death which happens due to an external accident is covered where 100% of the sum assured is paid.
2. Loss of Two Limbs, Two Eyes, One Limb and One Eye:
Any accidental injury, which results in the loss of both limbs or both eyes or one limb and an eye is covered and 100% of the coverage is provided.
3. Loss of one limb or one eye:
If the injury results in loss of one limb or loss of one eye, only 50% of the sum assured is paid.
4. Permanent Total Disability:
If the accident causes total disability, which renders the individual permanently unable to work, the entire sum assured is provided.
5. Permanent Partial Disablement:
Loss of toes, phalanges, hearing, fingers, etc. come under the purview of permanent partial disablement. Here a specified percentage of the sum assured is paid.
For instance, one ear disablement is eligible for 20% of the sum assured. The percentage of disbursement is mentioned in the list provided in the policy document.
6. Temporary Total Disablement:
Any temporary disability that makes you unable to work for a certain period is compensated in weekly payments. The weekly payments are expressed as a percentage of the sum assured. It is generally 1% of your sum assured per week.
Thus, be it a single fracture or multiple fractures, whether you are involved in a minor accident or a major one that makes you bed-ridden, your personal accident policy will cover your expenses.
The policy varies from a normal health or a life insurance policy because the cover granted and the premium charged are computed differently. Let us see how:
The coverage that you receive is based on your income. It is determined as a multiple of your average annual income. It also varies from one insurer to another depending on the insurer’s underwriting policy. Usually, individuals can avail a coverage ranging anywhere from 2 times to 8 times the annual income. Moreover, the cover also depends on the type of the above mentioned covers availed and differs according to the type of coverage taken.
The premium is calculated separately and then added to arrive at the total amount. It depends on the risk group under which you are classified.
Insurance companies segregate individuals in three risk groups based on their occupations. The groups are:
1. Risk Group I:
Those who have a sedentary occupation, which does not involve exposure to risk belong to this group. Examples include doctors, lawyers, accountants, bankers, etc.
2. Risk Group II:
People engaged in outdoor occupations with a higher risk exposure are in this group. They include engineers, contractors, builders, chauffeurs, among others.
3. Risk Group III:
People engaged in highly hazardous occupations involving high levels of risk belong to this group. Those working in underground mines, electrical workers, circus performers, professional racers, etc. are some examples.
The rate of premium rises with increasing risk.
For example: Bharti AXA offers 'Smart Individual Personal Accident' policy through 3 plans - Rs. 10 lakh, Rs. 20 lakh and Rs. 30 lakh. The premium starts at just Rs. 912 (applicable for personal capital sum assured of Rs. 10 lakh).
Don’t wait for unforeseen events to arrive! It is always a wise decision to take a personal accident policy that is affordable and beneficial. Emotionally and financially secure yourself as well your family.