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Most of us are familiar with the general insurance cover plans that we are exhorted to buy as a good investment for the future. We buy life insurance to provide for our families after we have passed on, health insurance to cover against ill health. However, one should be aware of other policies such as personal accident insurance plans which can be extremely beneficial in times of need.

You cannot predict an accident, yes, however, if you have a personal accident insurance plan, you can protect yourself against the financial consequences of an accident. The newspapers are always full of reports of accidents resulting in death or disability and some sort of cover against such tragedy is always a beneficial step. An injury after an accident can wipe out your savings and your future finances may be in peril if you are disabled -and can even impact your future where your job and livelihood is concerned.

What are the BENEFITS of a personal accident insurance plan?

  • A basic plan will cover against both death and disability due to an accident and the cover can be further enhanced to give you extended protection.
  • The policy covers all kinds of accidents, whether major or minor, ranging from mishaps such as falling off a bicycle to getting hit by a car
  • The premium rates of a personal accident insurance plan are laughably low -you can get an extremely high coverage by paying a premium in the range of Rs 225 which effectively means that the daily cost of you investing in a personal accident insurance plan is about 60 paise. Typically, a PA will cost 0.1 % of the coverage that you get -so for a cover of INR 10,000 you will have to pay about INR 1000 annually.
  • It can provide cover against partial, temporary or full disability and even the loss of livelihood.

Ask your insurer about this policy, as most agents will bundle it with other insurance plans -given that they get a very low commission from the sale. Thus, for example, a motor insurance policy will probably have a personal accident insurance plan built into it, which you can enhance by paying extra. Private insurance companies offer even better plans though the premiums are obviously higher -however, these are designed to protect you fully against any mishap that might have far reaching financial consequences.

Research your options carefully before buying and if you already have health and life insurance, consider investing in a personal accident insurance policy too -simply add an additional rider to your existing policy. It will be well worth it and the premium will cost you as much as a box of chocolates would. Fair enough, wouldn't you think?

Personal Accident Insurance

Like any insurance policy, it is important that one understands the fine print and is aware of the details and loopholes, if any. Often, the following is the case:

  • Hospitalisation benefit can be claimed only if the insured is admitted to the hospital within 7 days of the accident. He or she also has to be hospitalised for a period of 24 hours at least, for the cover to be activated.
  • If you have insured yourself against a temporary disability, your policy will pay you a lump sum every week for a period of about two years -the time frame will be in accordance to your plan of course -however, the policy will only be valid if this disability makes it impossible for you to go to your workplace. For this you have to submit proof of your disability in the form of a doctor's certificate and the payment of this cash benefit will start only after two months after the accident.
  • Ensure that the disability is clearly specified so that no discrepencies arise at the time of the claim. For example, it has been seen that a policy holder who lost an index finger in an accident and was given a certificate of 15 % disability by the hospital was denied his claim because the policy covered total disability. If he had lost his entire hand, he would have been eligible for the claim, the loss of a finger was not covered. Similarly, losing one eye will not be counted as total disability while losing both will be. So if your personal accident plan specifies a coverage for "total disability" ensure that you know what the exclusions are.