Personal Accident Insurance policy

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Imagine that you are the sole breadwinner of your family and you meet with a serious accident. You end up dying or with a disablement which results in a loss of income which can range from a few weeks to several years. What happens to your family in this case?  A term insurance protects your family in case of your death and a health insurance compensates you for hospital expenses. But what happens in case of disablement? This is where a Personal Accident Insurance can help you.

A Personal Accident Insurance covers a person from accidental death and disablement. The disablement include permanent total disablement, permanent partial disablement and temporary total disablement. Personal Accident Insurance policies offer comprehensive cover, which is better than the accidental riders usually available with other forms of insurance.

Policy features:
We have analysed personal accident insurance products of 10 companies on the basis of several parameters, as under:

Coverage and the Sum Assured: Most companies offer policies which cover accidental death and the above mentioned disablement. The Sum Assured is generally dependent on the type of cover you opt for, i.e.: only Accidental Death, or includes one or more types of disablement. Few companies like Bajaj Allianz and Tata AIG take the occupation, age and income into consideration while determining the Sum Assured amount.

Premium: One unique factor about premium calculations under Personal Accident Insurance is that it primarily depends on your occupation and location, and not on age, unlike other insurance policies. This is because your nature of occupation determines the extent of risk you are exposed to. The premium to be paid for such policies is much cheaper than a term policy or health policy. It usually ranges between Rs. 750 and Rs. 1500, depending on the company and additional covers you opt for. Future Generali offers the least premium, while HDFC ERGO charges the highest premium among the players we have compared.

Family Cover: All companies offer coverage for the individual, and an optional cover for his spouse and dependent children. While most companies offer a discount of 10% in premium rates if you take a family cover, Starhealth offers a lower discount of 5%.  HDFC ERGO and ICICI do not offer any discount on family packages.

Death Cover: In case of death due to accident, companies pay 100% of the Sum Assured to the nominee of the insured person.

Permanent Total Disablement: This refers to a permanent total disablement due to accident, which can include loss of 2 limbs (both hands or both feet), one hand and one feet, loss of sight of both eyes or speech or hearing of both ears. Generally companies compensate 100% of the Sum Assured. Some companies like Bajaj Allianz give 125% of the Sum Assured. There are other companies like Apollo Munich and New India Assurance which compensate 50% or 100% of the Sum Assured, depending on the nature of the disablement.

Permanent Partial Disablement: This also refers to permanent disablement, but the disablement is only partial and not complete. Instances of this include loss of one finger, loss of arm, loss of leg, one eye or hearing in one ear. Coverage generally starts from 5% of the Sum Assured and goes upto 100% of the Sum Assured in some cases, depending on the disablement.

Temporary Total Disablement: This covers disablement due to an accident, which may be temporary and total in nature, which affects the insured person’s ability to earn income. The temporary disablement usually will need to be certified by a doctor. The compensation given is in terms of a weekly benefit, and this is given for a period of 100 weeks (104 weeks in some cases). Some companies like National Insurance Company and Royal Sundaram specify limits on the weekly benefits which can be given.

Cumulative Bonus: Similar to health insurance, personal accident insurance policies also offer bonuses on claim free years. For most companies this is 5% per claim free year, subject to a maximum cumulative bonus of 50%. Some companies like Future Generali, Royal Sundaram and Tata AIG have a lower cumulative bonus limit of 25%. HDFC ERGO and ICICI do not offer this bonus. Remember to check the policy document for actual eligibility, as this feature is sometimes not available for death only policies and permanent disablement policies.

Other Benefits: Apart from covering basic benefits of death and disablement, companies offer a variety of other benefits when you take a personal accident insurance. The most common among them is the education fund - the child’s education is sponsored in case of death or permanent disablement of the insured parent. Generally, the limit for this head is Rs. 5000 per child, upto a maximum of 2 children. Some companies also give this as a % of the Sum Assured amount. Note than HDFC ERGO and ICICI do not offer this benefit. The other common benefit offered by most companies is reimbursement of accident medical expenses. This is usually an additional cover, which can be purchased by paying a higher premium. Some companies offer this without charging any additional amount. Other benefits include emergency ambulance benefits, family transportation benefits (expenses of transporting one family member to the hospital where the insured person is admitted), transportation of mortal remains to the residence of the insured person from the accident site, hospital cash allowance if the insured person is admitted in a hospital given on a per day basis. Some companies like Future Generali and Tata AIG also compensate for any modification to be carried out in your vehicle or house as necessitated by a permanent total disablement.

Which policy should you buy and which should be avoided?
Most companies offer similar features on personal accident policies. If you are not keen on the cumulative no-claim bonus amount, you can opt for Future Generali Accident Suraksha, as this policy has a low premium and has more add-on benefits compared to peers. If you are looking for a high Sum Assured, you can consider Tata AIG (Sum Assured upto Rs. 1 crore). But this policy also has a low bonus benefit. If you are looking for a pure death cover, you can consider Apollo Munich Personal Accidental Standard. Similarly, if you are looking at Permanent Total Disablement insurance, Bajaj Allianz Personal Guard is the best choice, as it offers 125% of the Sum Assured. Other policies which can be considered are personal accident policies from National Insurance Company and Starhealth Accident Care.

It is best to avoid personal accident policies from HDFC ERGO and ICICI, as premium is high and benefits are far lesser than other players in the market. Policy from New India Assurance can also be avoided as the accompanying benefits are few. You can also avoid Royal Sundaram Personal Accident Insurance as there are sub-limits in Sum Assured for family members and cumulative bonus is low.

Ideally one should consider Claim Settlement Ratio as well. This date is not available as of now. Kindly check this space later for this update.

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