Published: Aug 31, 2022, 10:10am
While many of you already save for a rainy day and/ or have purchased life and health insurance, there are several other useful and specific insurance covers that are just as important. One such policy is the personal accident insurance policy.
According to a report by the National Crime Records Bureau, 3,68,828 traffic accidents were reported in 2020 of which more than 50% were road accidents. The traffic accidents caused injuries to 3,36,248 persons and 1,46,354 deaths.
The impact of an accident can sometimes be fatal, sometimes temporary in nature, and sometimes permanent. Physical harm aside, it can also have a severe impact on your financial and emotional health. Injuries sustained during an accident can affect your ability to work and earn a livelihood. In such a scenario, a personal accident insurance policy can come to your rescue and protect you and your family.
Personal accident insurance gives you and your family the financial assistance required in the event that an accident causes death, bodily injuries or temporary or permanent total/partial disability. If the accident leads to the death of the policyholder, then 100% compensation (equal to the sum assured) will be payable to the appointed nominee.
Further, depending on the insurer and policy you choose, there are several other benefits that can accrue to the holder of a personal accident insurance cover. These include:
Personal accident insurance can be broadly classified into two categories – Group Accident Insurance and Individual Accident Insurance.
Group Personal Accident Insurance: Generally, companies and business owners opt to purchase personal accident cover for their employees. This is particularly in the case of manufacturing or construction businesses where workers and employees are more exposed to the risk of accidents. Such a cover acts as an assurance to employees that in the case of an accident at the workplace, they will be financially covered.
Individual Personal Accident Insurance: As the name suggests, such an insurance policy will be taken by an individual to protect himself/herself from the risk of accidental damages. As outlined, it would cover accidental death, temporary or permanent disability, etc.
Many people tend to ignore buying personal accident insurance because they believe that their existing life, health, or motor insurance policy will come to their rescue in case of an accident. However, it is important to note that these policies do not provide the same kind of holistic coverage required at the time of an accident, as offered by a personal accident insurance policy. Let’s consider a personal accident cover vis-à-vis a life insurance policy and a health insurance policy:
A life insurance policy, on the other hand, will typically only provide death benefit. However, it is important to remember that a personal accident cover is like a subset to a life insurance policy as it covers a specific risk, i.e., accidents.
As always, the amount of cover must be in line with your current monthly income and the quality of life you enjoy. The extent of cover and who all it covers will determine the costs and there are a variety of options available to buy quickly and painlessly online.
In case the insured event occurs, typically, you would need to immediately inform the insurance company and furnish a set of documents that would include the duly filled claims form, death/disability certificate, post-mortem/doctor’s report, FIR copy, medical certificate, medicine bills, discharge summary (if hospitalised) and investigation report.
As in most other insurance policies, you need to be aware of the exclusions, i.e., events that will not be covered by your policy. In the case of a personal accident insurance policy, these normally include intentional injury or suicide, injuries stemming from war, drugs or alcohol, participation in violent public disorders or labour disturbances, and adventure sports, and claims arising from past illnesses/sickness and pregnancy/child birth related issues.
While insurance cannot directly help with the emotional and psychological trauma of an accident, it can help offset the financial burdens that an unexpected event can bring. Today, there are several different types of insurance policies and providers, accessible on your device, that can holistically meet your nuanced risk protection needs.
Snehil Gambhir is a partner and director at BCG India. He is a core member of the Asia Pacific insurance practice. Prior to BCG, Snehil has held leadership positions with TCS – Transamerica, Aviva Life Insurance and GE. He has a masters in business administration from the University of Illinois, Urbana-Champaign.
Aashika is the India Editor for Forbes Advisor. Her 15-year business and finance journalism stint has led her to report, write, edit and lead teams covering public investing, private investing and personal investing both in India and overseas. She has previously worked at CNBC-TV18, Thomson Reuters, The Economic Times and Entrepreneur.
Published: Aug 31, 2022, 10:10am