Team AckoMay 4, 2022
Accidents can be detrimental to a person and loved ones. The emotional and psychological effects of a major accident can be dealt with, with time and the efforts of friends and family. But the major part is the financial aspect. Considering the magnitude of expenses related to medical treatment, one should always be ready with a back-up. This exact back-up is provided by the insurance company if you opt for a Personal Accident Insurance Policy.
Personal Accident Insurance is a health insurance policy that offers coverage to the policyholder if he/she suffers accidental injuries, disability, or death. This is similar to a normal health insurance plan, but the main objective is to cover sudden and unpredictable injuries/death of the policyholder.
Since accidents are completely unpredictable, the policyholder should be financially equipped to deal with such situations. This is where the Personal Accident Insurance Policy is helpful. A Personal Accident Policy can be of the following types:
A health insurance policy with coverage for accidents: A Personal Accident Policy can be purchased with a full-fledged health insurance policy. It offers separate sum insured and death benefit for the policyholder or other people insured under the same policy. For example, the policyholder and the insured family members will have a Personal Accident cover for a Family-Floater insurance plan if this add-on is bought.
A Personal Accident (PA) Cover with Motor insurance: It is mandatory by law to have at least one Personal Accident insurance add-on with a vehicle insurance policy. Earlier the PA cover was a part of the compulsory Third-party Liability insurance, but since one person can own multiple vehicles, the policyholder is now given an option to opt-in or opt-out of buying a PA cover with vehicle insurance.
As an add-on to the existing health plan: In order to accommodate diverse medical events, insurance providers offer add-on covers. This allows the insured to customise their plan according to their needs. An accident cover is usually offered as one such add-on to the base plan.
An accident can sometimes become a life-changing event in case of serious injuries. People who are a part of a serious accident can undergo major changes in terms of their ability to move around, i.e. they can have a disability.
A disability can be of two types, partial or permanent disability. In the case of partial disability, the injured person can continue with their life by making some alterations in their daily routine. For example, loss of one eye, one arm, or one leg.
Permanent disability is more serious in nature and the person may not be able to carry on with life as before. For example, complete loss of eyesight, loss of arms, or loss of legs. Here being financially stable is crucial.
Financial stability after a major accident can be brought with the help of a Personal Accident insurance cover. Thus, buying this plan to secure your future against an unfortunate event is highly important.
Every insurance policy offers financial benefits. Likewise, a Personal Accident Insurance policy offers a financial backup when the policyholder or an insured person suffers accidental injuries. Here are the key benefits of buying a Personal Accident Health insurance policy:
Cost of Hospitalisation is Covered: Accidents may result in injuries that require immediate medical treatment. The cost of availing treatment is covered under a Personal Accident plan.
Death Benefit: A fixed amount of money will be paid to the next of kin of the policyholder in case of death. This amount is usually equal to the sum insured of the health insurance policy.
Coverage for Disability: The expenses related to disability, for example, the cost of buying prosthetic body parts, or accessories that aid in walking or moving around, etc. can be covered under a Personal Accident Insurance Policy.
Loss of income: In case of permanent disability, the policyholder will be given a lump sum amount of money that can act as income replacement. This feature is included by some insurance companies in their Personal Accident Insurance Plan.
Coverage for Child's Education: In case of death, the policyholder's child (or 2 children) is granted a fixed amount so that their education is not affected due to the breadwinner’s death. However, this is commonly offered under Group Personal Accident Insurance policy.
Peace of Mind: The most important benefit of buying a Personal Accident Insurance Policy is that the policyholder can rest assured because the insurance company will give financial aid if he/she can no longer provide for the family.
Since accidents can have major devastating effects on a person and their loved one, one should always consider buying a Personal Accident cover. The eligibility for buying a health insurance plan is 18 years and one can buy the PA add-on with a base plan. Thus, it is possible to buy a Personal Accident cover at 18 years of age and continue to keep the insurance cover active with the help of renewals.
The maximum entry age for buying health insurance at most insurance companies is 65 years. Beyond this age, the policyholder needs to opt for a senior citizen insurance plan with the PA add-on. It might cost a few more rupees to pay the premium for new health insurance after a certain age. Thus, one should buy a plan as early in life as possible.
Some insurance companies may ask for a specific set of documents in order to buy their health insurance plan. Usually, the following documents are enough to buy a Personal Accident Health Insurance Policy:
Details of known pre-existing diseases
The Accident Insurance Premium Calculator helps you to know the approximate cost of your health insurance policy. This tool is helpful when you are comparing different health insurance plans. You simply need to enter a few details about the required health insurance policy and the premium calculator will show a result on what the approximate premium for your policy would be.
Also, read: Health Insurance Premium Calculator
Inclusions are situations that are covered under a health insurance policy. If the policyholder raises a claim for any of these situations, then the insurance company is liable to pay the claim as per the terms and conditions of the insurance policy.
Cost of treatment: Accidental injuries require medical attention and its cost is covered under a Personal Accident Policy.
Cosmetic Surgery: Cosmetic or corrective surgeries may be required in certain accident cases when the patient suffers from disfigurement.
Dental treatment: In case of accidental injuries to the teeth of an insured person, the cost of dental treatment will be covered under health insurance.
Expenses related to Funeral: Funeral expenses will be borne by the insurance company in case of policyholder's death.
Death Cover: A pre-decided lump sum amount will be paid to the policyholder's family.
Injuries due to Terrorism: Some insurance companies offer coverage for treating injuries caused if they are a victim of terrorism.
These are situations for which the insurance company can reject a claim. The policyholder needs to make sure that he/she is well aware of the exclusions to avoid claim rejection.
Intentional injuries, for example, suicide is not covered.
Injuries from war or civil unrest.
Accidents caused due to being in an intoxicated state.
Injuries due to adventure sports.
Any other exclusions mentioned in the insurance policy.
A personal accident insurance cover can be bought with a health insurance policy. Since this is an add-on, its cost is decided by the insurance company. The deciding factors are the number of coverages, the number of insured persons, the sum insured of the policy, etc. One can get an idea about the cost of personal health insurance by comparing health insurance plans that include this add-on.
Life insurance is a long term policy that offers to pay a lump sum amount of money upon death or maturity of the policy. Whereas Personal Accident Insurance scheme is a short term policy that can be bought with a health insurance policy. Here are the differences between these two plans:
|Parameter||Life Insurance||Accidental Insurance|
|Policy Period||10, 20, or more years||1 year|
|Claims||Allowed for death or disability||Allowed for the cost of treatment (hospitalization), death, disability, etc.|
|Premium||Annual premium payment. The cost of the policy is higher as compared to a personal accident policy.||Upon expiry. The cost of this add-on is less than the cost of a Life insurance policy.|
A Critical Illness policy provides insurance coverage for treating life-threatening diseases like cancer. And an Accidental Insurance policy can help you financially for treating accidental injuries. Here are more differences between these two type of plans:
|Parameter||Critical Illness Insurance||Accidental Insurance|
|Coverage||Serious diseases like cancer, brain stroke, heart attack, etc.||Injuries, disability, or death related to an accident.|
|Type of Plans||Stand-alone or Add-on||Add-on|
A Term Insurance policy offers a death benefit to the policyholder whereas an accidental disability policy offers coverage for disability caused due to an accident. Here are the differences between the two types of health insurance policies:
|Parameter||Term Insurance||Accidental Insurance|
|Category||Life Insurance||General Insurance|
|Policy Period||10 to 30 years||1 year|
|Coverage||Death benefit||Hospitalization, disability, death, etc.|
|Premium||Higher than Personal Accident Cover||Lower than Term Insurance|
|Number of insured(s)||One||One or more depending upon the type of base plan|
The policyholder can raise a claim when he/she requires financial aid in case of an accident. There are two ways in which a claim can be raised. The first is the traditional method and the second is the online method. The former requires more time and efforts from the policyholder as well as the insurance company and the latter can help in completing the claim process faster. Here are the two types of claims:
A cashless claim can be availed in a network hospital through the Third Party Administrator. He/she will help you with the claim process while the insured person is getting treated. The hospital bill will be settled by the insurance company, and you just have to pay the deductibles.
In this type of claim, you need to first pay all the medical bills, collect invoices, and then raise a claim. Your insurance company will verify the documents and reimburse the amount if the claim is successful.
Buying a stand-alone Personal Accident Insurance Policy will not give any tax benefits. However, a health insurance policy allows tax-deductions under Section 80D of the Income Tax Act. This benefit depends upon the type of policy and the number of insured persons. For buying an Individual Health insurance policy the policyholder can claim Rs. 25,000 under tax deductions. In the case of Family-Floater plan, the policyholder can claim an additional tax benefit of Rs. 25,000 for each parent if they are above 60 years of age. Note that the amount of tax benefit may change as per the corresponding tax regime.
It is important to allot some time while buying a health insurance policy to make sure that adequate coverage is available at the time of need. Especially in case of an accident. Here are tips that will help you buy an accident insurance policy:
Understand your requirements: Always buy a health insurance policy that suits your requirements.
Decide the amount of Sum Insured: Look for a plan that provides adequate sum insured when in need.
Compare insurance plans: Comparing Personal Accident policies from different insurance companies will help you find the best policy at a lower price.
ACKO is an emerging general insurance company with an ever-increasing base of satisfied customers. It is also one of the first digital insurance companies in India to offer quick claim settlement and paper-less processes. Here is how ACKO's Personal Accident policy works:
The cost of buying the best Personal Accident Policy from ACKO is low as compared to other insurance companies. For example, the Motor Insurance Personal Accident policy with the sum insured of Rs. 15 Lakh is available for as low as Rs. 350 depending upon the type of vehicle.
Once you raise a claim, you can hand over the reins to us and we will take care of things till your claim is settled.
Take a look at the following table to understand the details related to inclusions:
|Type of injury||Compensation (% of sum insured)|
|Total loss or loss of use of one limb||50%|
|Loss of one eye||50%|
|Total loss or loss of use of two limbs||100%|
|Complete loss of eyesight||100%|
|Total loss or loss of use of one limb and one eye||100%|
|Permanent total disability||100%|
Note: The cost of hospitalisation is not covered under a Personal Accident Policy. However, expenses related to a medical emergency will be covered under a Health Insurance plan. Thus, buying health insurance is crucial.
The policyholder cannot raise a claim in the following situations:
Accidents that happen when the insured is in an intoxicated state.
Injuries sustained while driving without valid documents (in case of motor insurance).
Any other exceptions as mentioned in the policy.
Here are a few commonly asked questions and answers related to the above topic:
1) How to buy personal accident insurance?
One can buy a Personal Accident Insurance Policy either online or from a traditional insurance company. The online process is faster. To buy a personal accident policy online, visit the insurance company's website and look for a suitable plan. Read the policy terms and other details. Then proceed to make payment after ensuring that you have to go through the fine print.
2) Is it necessary to buy a personal accident cover if the policyholder already has life insurance?
A life insurance policy offers a death benefit and maturity benefit as per the condition of the plan. It does not provide coverage for treatment for injuries that are caused due to an accident. Thus, it is important to buy a personal accident policy even if life insurance is active.
3) Should a person with a low risk opt for a Personal Accident Policy?
Yes, since accidents are completely unpredictable, the risk associated is also unprecedented. Thus, every person irrespective of their age, gender, occupation, etc. should buy a personal accident policy.
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