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Why you need personal accident insurance

Smita Tripathi

Anyone who has ever driven on Delhi's roads knows that there's a high statistical probability of being involved in an accident.

And the Indian Railways too have become increasingly accident prone in recent years.

Considering the fact that modern-day life is so dangerous, perhaps it would be a good idea to take a look at personal accident insurance policies that are on offer from all the top players.

The word 'accident' means an unforeseen or unexpected event. These policies provide compensation in the event of the insured person sustaining injuries, solely and directly from an accident caused by a third party that results in death or disablement, be it temporary or permanent.

The policies cover a number of eventualities, including plane crashes, train accidents, murder, hit-and-run and even death due to snakebite.

Personal accident insurance policies are offered by private players like Iffco Tokio General Insurance, Bajaj Allianz General Insurance, Royal Sundaram Alliance Insurance and ICICI Lombard.

Besides, the four general insurance companies - National Insurance, New India Assurance, Oriental Insurance and United India Insurance - also offer personal accident insurance.

The four general insurance companies offer the same policy and a person can buy it from any of the companies.

Any person between the age group of five and 70 years can apply for a personal accident insurance policy.

However, if you purchase the policy from Royal Sundaram, you need to be between 18 years and 70 years, and in the case of Bajaj Allianz, the policy is only sold to persons in the age group of 18 years to 65 years.

All these are annual policies and the premiums have to be paid once every year. They are low-cost policies with high benefits.

The premiums are extremely low. For instance, in the case of a policy bought from any of the general insurance companies, one needs to pay a premium of only between Re 1 and Rs 1.50 per Rs 1,000 sum assured.

Thus, for a policy of Rs 100,000, you pay a premium between Rs 100 and Rs 150 (depending upon the type of benefits availed). Similarly, in case of Iffco Tokio, the premium is Rs 1.47 per Rs 1,000 sum assured.

Most companies do not fix the sum assured. It depends upon the earnings and capacity to pay premiums.

Bajaj Allianz restricts the total sum assured to 70 times of the insured's monthly average earnings. On the other hand, ICICI Lombard and Iffco Tokio restrict it to Rs 500,000 and Rs 600,000, respectively.

Personal accident policies provide three types of benefits.

First, there is death only, in which case the total sum insured is paid as compensation.

Second, they offer a wider cover, which includes permanent total disablement (loss of both limbs or both eyes) where the total sum insured is paid as compensation. In the case of Bajaj Allianz, 125 per cent of the sum assured is paid as compensation.

The wider cover also includes permanent partial disablement (loss of one limb or one eye), in which case 50 per cent of the sum assured is paid.

The third benefit for which a slightly higher premium needs to be paid, includes - besides the covers available under the other two benefits - weekly compensation for the total period of temporary disablement subject to a maximum of 104 weeks at the rate of 1 per cent of the sum insured or Rs 5,000, whichever is lower.

In the case of Iffco Tokio, this limit is Rs 6,000.

Besides this, the companies also provide additional benefits such as children's education bonus, financial assistance, ambulance charges incurred, et cetera.

For instance, two children of less than 23 years are provided an educational fund at 10 per cent of sum insured or Rs 5,000 per child, whichever is lower, in case of a policy bought from any general insurance company, if the accident leads to death or total permanent disability of the insured.

Similarly, if the accident leads to total or partial permanent disability resulting in loss of employment, ICICI Lombard pays a lump sum equivalent to 100 per cent of the sum assured to the insured.

On payment of additional premium, benefits such as medical expenses, hospital confinement allowance and purchase of supporting equipment, like crutches and wheel chairs, can also be availed.

In order to avail the benefits of the policy, the claim should be made within 30 days from the date of the accident.

The insured must furnish the duly completed claim form, doctor's report, police report (wherever necessary), death certificate (wherever necessary) and medical bills (wherever applicable) in support of the claim.

The company may then require the insured to undergo a medical examination at a company specified hospital.

Most companies offer a no claims benefit. For instance, if you purchase a policy from Royal Sundaram and at the end of the year you have not made any claim, your major benefit levels (accidental death and accidental disability) will be increased by 5 per cent.

The benefit will apply for each consecutive claims-free year, up to five years.

Of course, there are exceptional situations that aren't covered by these policies. They don't, for instance, cover suicide, self-inflicted injury, pregnancy or childbirth, pre-existing physical or mental defects and infections. Various dangerous situations and sports aren't covered either.

For instance, if you are anything other than a civilian passenger on an airline, you cannot ask for cover.

Also, motor rallies, ballooning and several other dangerous sports are not included when you apply for a personal accident insurance policy. And if you are caught in a war or a civil war, don't hope for help from the insurance companies.

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