Personal Accident Insurance

Table of Content

1. What is personal accident insurance?

2. Road Accident Statistics in India

3. Features of personal accident insurance policy

4. Types of Personal Accident Insurance Policy

5. Accidental Insurance Coverage

6. Benefits of a Personal Accident Insurance Policy

7. What's covered and what's not covered in a personal accident insurance plan?

8. Who can get a personal accident insurance policy?

9. Why Choose Personal Accident Insurance?

10. Understanding Premium Calculation in Personal Accident Insurance

11. Difference Between Accidental Insurance & Life Insurance

12. Differences Between Accidental Insurance and Critical Illness Insurance

13. Difference Between Personal Accident Insurance & Term Insurance

14. What's the price of accident insurance?

15. How much accident insurance do I really need?

16. How do you file a claim on your personal accident insurance?

17. Required Documents for Accidental Death or Disability Claim

18. Additional Benefits of Personal Accident Insurance Policy

19. Tax Benefits under a Personal Accident Policy

20. FAQs on Personal Accident Insurance

What is personal accident insurance?

Personal accident insurance financially covers the insured person against uncertainties such as death, injuries, and partial/complete disabilities arising due to an unfortunate accident. In case of death, the policyholder’s nominee gets the assured sum. Additionally, it’s worth considering plans like the best term insurance plan for 1 crore or even exploring a 2 crore term insurance option for enhanced financial protection in the event of such unforeseen circumstances.

Road Accident Statistics in India

As per the Ministry of Road Transport and Highways (MoRTH), published through the Press Information Bureau (PIB), India had 4,12,432 road accidents in 2021, with 1,53,972 fatalities and 3,84,448 injuries.

In 2022, these figures increased to 4,61,312 accidents, 1,68,491 fatalities, and 4,43,366 injuries, indicating an 11.9% rise in accidents, 9.4% in deaths, and 15.3% in injuries. This considerable increase in the rate of accidents emphasises the necessity for an accidental insurance policy as financial security.

Features of personal accident insurance policy

Types of Personal Accident Insurance Policy

• Individual Accident Insurance

A personal accident insurance policy only covers one person and offers financial protection against unexpected accidents. It pays for accidental death, permanent total disability (loss of limbs or eyesight), permanent partial disability (loss of fingers), and accidental injuries. Furthermore, the policy provides fixed lump-sum payments or income benefits that assist the insured or dependents in covering medical bills, recovery costs, or loss of income.

• Group Accident Insurance

Group accident insurance provides personal accident coverage to a group under one plan, usually purchased by employers for their employees. It indemnifies against mishappenings like accidental death, permanent total disability, permanent partial disability, and accident-induced injuries.

The policy ensures the protection of the collective finances by paying out lump sums or covering medical expenses. This, in turn, allows beneficiaries to cover the costs of treatment, recovery, or loss of income caused by unexpected accidents.

Accidental Insurance Coverage

1. Accidental Death Cover

All accidental deaths are insured under most personal accident insurance policies. It means death caused by an unexpected and sudden accident. In this case, the nominee is paid the full sum assured. This benefit offers essential financial assistance, enabling the family of the insured to maintain daily living expenses and financial commitments during a period of emotional loss.

For instance, consider an individual who has a life cover of ₹70 lakhs and adds the accident insurance coverage for ₹30 lakhs. Then, upon the individual’s death due to an accident, the family will get a sum of ₹70 lakhs + ₹30 lakhs = ₹1 crore.

Therefore, without the accident rider, they will not get the benefit of the additional ₹30 lakhs. 

2. Permanent/Total Disability Cover

Permanent or absolute disability is the total loss of limbs, eyesight, or mobility, preventing the individual from engaging in any profitable work. The condition is normally covered by personal accident insurance.

In case the disability arises, the insurer pays a specific percentage or the entire sum insured. The financial cover facilitates long-term care, lifestyle adjustments, and offsets income loss for the policyholder and his or her family.

3. Permanent Partial Disability Cover

Permanent partial disability is the loss of an eye, a limb, or the partial loss of mobility in one part of the body. It is usually covered under an accident insurance policy. A fixed percentage of the sum assured is payable based on the severity and type of the injury.

For instance, you will get 100% of the sum insured if the injury qualifies. Otherwise, you will get varying percentages of the sum insured. The payment goes towards rehabilitation, treatment expenses, or adaptations for a return to normal living.

4. Temporary Total Disability

Temporary total disability implies that the insured cannot work because of an injury caused by an accident, such as a fracture or illness, that needs extended rest. Everyone covers this with a weekly or monthly allowance while the insured recuperates. Moreover, this financial assistance takes care of basic expenditures such as groceries, bills, or EMIs while the insured is away from work.

Benefits of a Personal Accident Insurance Policy

• Helps in Savings

Injury-related procedures like hospitalisation, operations, and diagnostics can be costly. A personal accident policy insures these hospital bills, keeping the necessity to draw on out-of-pocket savings to a bare minimum.

Moreover, this benefit assists families in coping better with healthcare costs during unforeseen medical crises. For instance, consider the required surgery cost to be ₹1.5 lakhs after a road accident. An accident policy covering it fully will not require you to exhaust your savings.

• Protects Your Family

Personal accident insurance covers accidental death. Unfortunately, if there is a fatal accident, the nominee gets the entire sum assured. This means the family has money to continue supporting the general needs of the children's education, household bills, rent, and other daily expenses even in the absence of the insured.

Consider Rahul, who works at a construction site, is covered with a personal accident cover. His wife received ₹25 lakhs upon his death from a fatal fall at the site, helping her pay for their children's school fees and daily living costs.

• Provides Coverage for Medical Expenses

The policy provides monetary assistance for the treatment of injuries and disabilities caused by accidents. It covers emergency medical attention, operations, inpatient hospitalisation, and physiotherapy. Such an extended coverage saves money worries and ensures that quality care need not be compromised upon sudden hospitalisation.

For instance, Priya’s accident required 10 days in the ICU and later, physiotherapy. The policy reimbursed her ₹2 lakhs in treatment costs, easing the family's financial stress.

• Provides a Daily Cash Benefit

If the policyholder is hospitalised for an accident, there could be a fixed daily cash compensation, usually between ₹1,000 and ₹2,000, for up to 30 days. This can be utilised for taking care of daily household expenses or non-medical costs, relieving some of the monetary burdens during recovery. For example, while recovering from a leg fracture, if you received ₹1,500 daily for 20 days, it would help you pay your groceries and utility bills.

• Provides Coverage for Dependent Children

There are insurance policies for personal accidents that provide additional coverage for dependent children if the covered person becomes permanently disabled or dies. This could be a lump-sum payment or funds to cover the child’s educational expenses.

These benefits provide long-term security and stability for the child during traumatic and financially strained situations. For instance, after Nisha’s accident left her permanently disabled, the insurer provided an education benefit that helped her daughter continue school without interruption.

• Provides Disability Cover

Personal accident policy provides cover for both permanent total and partial disability. The insured is paid a full or partial sum assured depending on the type and extent of injury. Moreover, this financial support helps in medical treatment, rehabilitation, or lifestyle changes after the accident.

Consider losing partial mobility of an arm. Having an accident insurance of ₹5 lakhs can help in therapy and home modifications.

• Cumulative Bonus Benefit

Insurers tend to appreciate safe, claim-free years by providing a cumulative bonus, usually 10% to 50% of the sum insured. This additional coverage comes without any extra premium paid, adding value to the policy over the years and providing more protection in the future.

For instance, Meera did not file any claims for five years, and her sum assured increased from ₹10 lakhs to ₹15 lakhs at no extra cost.

• Speedy Claim Processing

Several insurers provide prompt settlement of claims, usually within 3–7 working days after all required documents are submitted. This guarantees the insured or his family receive funds on time, particularly important during emergency or recuperation phases.

For example, after Sameer submitted his documents post-accident, the insurer credited the approved amount within four working days, helping him cover immediate rehab bills.

What's covered and what's not covered in a personal accident insurance plan?

Let us dig deeper to understand what all aspects are usually covered and what all are excluded from personal accident insurance policy:

Who can get a personal accident insurance policy?

Here’s the list of basic term insurance eligibility criteria that you need to fulfil for purchasing a personal accident insurance plan:

• Minimum age to buy this policy is usually 18 years, while the maximum age can vary across different insurers.
• The applicant should not have any pre-existing disease, such as diabetes, heart stroke, cancer, etc, that may likely become the cause of accidents.
• The applicant needs to provide honest and accurate information about their occupation as well as the nature of work, as this may affect their premium amount if the occupation or job profile seems risky and prone to accidents.

Why Choose Personal Accident Insurance?

It takes a single unfortunate accident to cause a minor or major injury or even permanent disability or death. In any of these cases, you and your family are likely to be left financially vulnerable due to the big hospitalisation bills that would come with such accidents. That is exactly where having a personal accident insurance policy can financially help you cover such accident-related expenses in the form of a lump sum amount and a steady income.

Understanding Premium Calculation in Personal Accident Insurance

The premium cost for an insurance for a personal accident plan is based on the insured’s occupation, since it indicates the degree of risk. The following table shows the risk class, risk levels and corresponding examples of occupations to facilitate premium calculation in personal accident insurance:

Difference Between Accidental Insurance & Life Insurance

• Death Cover

A personal accident insurance plan offers an assured sum in case of the death of the policyholder. On the other hand, a life insurance policy offers financial cover irrespective of the death’s reason, except in a few cases like suicide.

• Death Coverage Condition

Life insurance offers death benefits if the policyholder dies a few months or years after the disease/illness. But in the case of an accidental insurance plan, the death cover is offered even if the policyholder dies instantly or within a specific time period after the accident.

• Plan Options

There are many insurance plans that provide different types of covers, such as death cover, child insurance plans, retirement plans, etc. But an accident insurance plan specifically offers cover against injuries, disabilities or death due to an accident only.

• Partial Disability Cover

In case an accident causes some injury that results in either partial loss of limb or sight or other organs, it is likely to be covered under the personal accident insurance policy. Whereas in the case of a life insurance plan, partial disabilities might not be covered.

Life Insurance Policy VS Accidental Insurance Policy Comparison Table

Understanding the distinction between a personal accident insurance policy and a life insurance policy can help people make an appropriate decision about which type of coverage they need. The following table presents some major differences:

Differences Between Accidental Insurance and Critical Illness Insurance

Difference Between Personal Accident Insurance & Term Insurance

While both accidental insurance policies and term insurance offer financial protection, they serve different purposes. The table below highlights the key differences to help you make an informed decision.

What's the price of accident insurance?

The price of accident insurance, i.e. the premium you pay for the policy, depends on multiple factors such as the type of plan chosen, your age, occupation, medical history, etc.

How much accident insurance do I really need?

Generally, it is advised to opt for a personal accident cover amounting to 100 times your monthly income. This would assist in adequately covering the policyholder's financial obligations, such as children's education, loan EMIs, household expenses, etc.

How do you file a claim on your personal accident insurance?

There are two ways of raising a claim against a personal accident insurance policy:

• Cashless claim process

Step 1: Quickly inform your insurance company within stipulated time of getting hospitalised

Step 2: Share your insurance policy details and valid ID proof at the network hospital's insurance claim desk

Step 3: Submit all the details in the pre-authorisation form at the hospital

Step 4: Fill up a request form on the insurer’s official portal to inform the insurer

Step 5: Your insurance provider might take some time to review the application and inform you of acceptance or rejection and will communicate accordingly

Step 6: If available then you can check the status of the claim online

• Reimbursement claim process

Step 1: Inform the insurance company within the stipulated timeline of your insurance provider for hospitalisation to claim reimbursement

Step 2: As per the norms of your insurance provider please submit all the required documents within stipulated timelines of being discharged

Step 3: The insurance provider will either accept or reject your claim after reviewing the submitted documents

Step 4: If your claim is approved, the insurer shall process the claim amount

Step 5: If your personal accidental insurance claim request is rejected, you shall receive a communication from your insurance provider

Required Documents for Accidental Death or Disability Claim

• To process a personal accident insurance claim, especially for accidental death or disability, submitting the correct documents is essential for timely approval.
• Commonly required documents include:
  • Original policy document (Not necessary in case of dematerialised policy document)
  • Death Claim Form
  • Death certificate issued by local authority
  • Claimant's passport size photograph
  • Personalized Cancelled Cheque or Bank Passbook (with Printed A/c no, IFSC & Name account holder)
  • Claimant's Valid Identity Proof
  • Claimant's Valid Address Proof
  • Claimant's PAN CARD/Form 60 (if PAN Card not available)
  • First Information Report (FIR)
• However, insurance companies can request additional documents depending on the nature of the accident or the type of claim made.

Additional Benefits of Personal Accident Insurance Policy

1. Hospital Daily Cash

Some personal accident insurers offer a daily cash allowance such as Rs. 1,000 or Rs 2,000 for a particular period, like a week or month during hospitalisation.

2. Ambulance Expenses

Compensation is provided for ambulance expenses incurred for carrying the insured to the hospital after the accident.

3. Returning the body of someone who has died

If the policyholder dies due to the accident, the nominee receives compensation for the expenses incurred for repatriation as well as transportation of the policyholder’s mortal remains from the accident site to either the hospital, home or even the cremation place. Compensation is likely to be also provided for the expenses incurred on cremation related religious ceremonies.

4. Broken Bones

If the insured suffers fractured bones or any other bone damage, a fixed compensation gets paid under the personal accident policy.

5. Burns

Compensation can also be provided for burns caused by an accident.

6. Family Transportation Allowance

This allowance is applicable when the hospital is far from the insured's place of residence. In such cases, the actual transportation cost which was incurred by the immediate family members to reach the policyholder also gets compensated. However, the total reimbursement payable shall be subject to the amount specified in the insurance policy.

7. Education Advantage

If the policyholder unexpectedly dies due to the accident, the insurer usually covers the cost of his/her dependent children's education up to a specified limit.

8. Loan Protector

In case the policyholder dies or suffers lifelong disabilities, a lump sum amount, upto a specified limit as per the policy, gets paid to handle the ongoing loan EMIs.

9. Home Alteration and Vehicle Modification Benefits

Also known as adaptation allowance, some insurers may offer home alteration or vehicle modification benefits in case of permanent total disability or dismemberment due to the accident. This covers the money spent to modify one's house and/or vehicle due to the disability.

Tax Benefits under a Personal Accident Policy

Section 80D of the Income Tax Act^* does not provide any tax benefits for premiums paid towards personal accident insurance policy. However, it is important to keep in mind that the primary reason for buying such insurance is the financial coverage it offers, not the tax benefits.

FAQs on Personal Accident Insurance

Q. What is a personal accident insurance policy?

Personal accident insurance financially covers the insured person against uncertainties such as death, injuries, partial/complete disabilities arising due to an unfortunate accident. In case of death, the policyholder’s nominee gets the assured sum.

Q. What does personal accident cover?

A personal accident insurance plan offers financial support in case of injury, death or disabilities caused by an unfortunate accident. Besides a lump sum cover, accident insurance would also take care of accident related expenses. It also usually covers the education expenses of the policyholder's dependent children, loan EMIs (if any), and also offers some allowance if the policyholder suffers from a permanent disability.

Q. What all is not covered in personal accidents?

Personal accident insurance usually does not cover some instances such as natural death, suicide, pregnancy, childbirth, pre-existing diseases and disabilities, participation in military, naval, air force, or adventurous/sports activities, etc.

Q. How to claim PA cover?

There are two ways of raising a claim against personal accident insurance policy, either through cashless claim procedure or through reimbursement.

Q. What kind of documentation is required for PA cover?

If you're filing a claim for accidental death or injury, you'll need to submit documents such as a post-mortem report, death certificate, FIR report, medicine bills and medical certificate.

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