Why You Should Have Accident Cover
Content
14
Insurance
The Economic Times Wealth, January 28 - February 3, 2013
Why you should have a personal accident cover
For less than `1,000 a year, you can get a `5 lakh cover against death and disability due to a mishap.
SAKINA BABWANI
Understand terms & conditions
It’s important to understand the terms and ou need a life insurance policy to conditions clearly before you buy a policy. For cover the risk of death and a health example, hospitalisation benefit can be availed of insurance policy as a cushion agaionly if the policyholder is admitted within seven nst hospitalisation expenses. While days of the accident and is hospitalised for at least most readers are bound to be famil24 hours. A fractured leg is a temporary iar with these essential covers, very few would disability, and if you have taken a cover against it, have heard of the personal accident cover. Persoyour policy will pay a weekly sum of `5,000 for nal accident schemes cover the policyholder agaup to two years. However, this weekly cash beneinst death or disability due to an accident. All genfit is paid only if you are unable to go to work and eral insurance companies offer these policies, the payment starts only 60 days after the but it’s very unlikely that an agent will try to sell accident. One also has to submit proof, including you one. These low-priced policies are not very a doctor’s certificate for the disability that popular because the agent earns barely `20-30 as prevents one from attending work. commission from selling such a policy. Also, be very clear about the definition of However, you should buy a personal accident disability. When a Delhi-based policyholder lost policy because it plugs an important hole in your his index finger in a car accident, the hospital insurance portfolio. Firstly, it will provide gave him a certificate of 15% disability. Yet, the life financial support to the policyholder if he is insurance company denied his claim because he disabled after an accident. Secondly, the had a cover against total disability. “The policy magnitude of the mishap doesn’t matter; document defines the loss of hand as total even minor ones like falling off a bicycle disability. The loss of one digit, even though it was the index finger, was not and breaking an arm, or fracturing a Sectors covered,” he says. leg while playing football are covered to bet on Permanent total disability is by the policy. when rates fall Page 6 defined as total loss of sight in both If you thought term insurance polieyes, or total loss of use, or dismemcies were cheap, wait till you find out berment of both hands or legs, or one about the premium rates of a personal hand and one leg. Losing one eye is a accident policy. For as little as `225 a permanent, but not total, disability. Ask the year, you can get a cover of `5 lakh. The daily insurance company or agent to explain the cost works out to about 60 paise. However, this is exclusions clearly to you. the rate for a basic cover from a PSU insurer and will only cover death and permanent disability. If you want enhanced protection, you will have to You may also have a group cover shell out more (see graphic). Most companies offer personal accident insuraBundle it with other covers nce to their employees through a group cover. One way to get the agent interested is to buy it However, this is a very basic cover and may not along with your health or motor insurance. offer the benefits offered by a standalone policy. “Since agents get very low commissions, they “I recommend an individual policy only if one usually try to bundle the personal accident cover can afford it and if his company’s cover is with some other insurance product. However, insufficient,” says Jayant Pai, head, marketing, this doesn’t mean that you will pay a lower premiParag Parikh Financial Advisory Services. um, though some companies may give you a You can also buy an accident cover with discount,” says Sanjay Datta, head of undera rider along with a life insurance policy. writing and claims, ICICI Lombard General InsurHowever, these riders come with strings atance. A basic personal accident cover against tached and don’t offer certain covers. death and permanent total disability is already “Since life insurance companies cannot built into a motor insurance policy. You can offer anything but life cover, you will not be enhance the cover by paying extra. covered against other damages, such as hospiPSU insurers offer a maximum cover of `5 lakh talisation expenses,” says Sanjay Tiwari, viceunder a personal accident plan. Private insupresident, strategy and product, HDFC Life. rance companies offer a higher cover and a wider “Riders can never be as comprehensive as a range of benefits, but the premium rates are highstandalone policy,” he adds. er too. You can take a cover of up to 8 times your annual salary. Apart from the basic death and permanent disability cover, you can buy additional protection against partial and temporary disability, even loss of livelihood. “A personal accident policy covers the buyer against costs that can shatter him financially,” says Subrahmanyam B, senior vice-president, health & commercial lines, Bharti AXA General Insurance.
Y
Personal accident cover of `5 lakh
The premium will depend on the cover you select.
Covered
Death only
A B
Covered
(in case the policyholder dies in an accident)
Full cover is paid
Premium
`225
Permanent total disability
(loss of limbs, eyesight or other disability)
Entire insured Premium amount is `175 paid Covered
C D
Covered
Permanent partial disability (loss of one limb
or an eye)
50% of cover is paid
Premium
`100
Temporary partial disability
(fractured limb)
1% of cover is paid
Premium
`250
Total cost of a+b+c+d
} `750
Annual premium figures for PSU insurers. Private insurers may charge more and offer different covers.
A plain vanilla personal accident cover is not very expensive, but it can come handy in case of a mishap. Selfemployed professionals who travel a lot during the course of their work will find this especially useful. Buy one right away so that there is nothing left to chance in your insurance portfolio.
A plain vanilla personal accident cover of `5 lakh can be available for as little as `225 a year, and will cover death and permanent disability. Please send your feedback to [email protected]
Insurance
The Economic Times Wealth, January 28 - February 3, 2013
Why you should have a personal accident cover
For less than `1,000 a year, you can get a `5 lakh cover against death and disability due to a mishap.
SAKINA BABWANI
Understand terms & conditions
It’s important to understand the terms and ou need a life insurance policy to conditions clearly before you buy a policy. For cover the risk of death and a health example, hospitalisation benefit can be availed of insurance policy as a cushion agaionly if the policyholder is admitted within seven nst hospitalisation expenses. While days of the accident and is hospitalised for at least most readers are bound to be famil24 hours. A fractured leg is a temporary iar with these essential covers, very few would disability, and if you have taken a cover against it, have heard of the personal accident cover. Persoyour policy will pay a weekly sum of `5,000 for nal accident schemes cover the policyholder agaup to two years. However, this weekly cash beneinst death or disability due to an accident. All genfit is paid only if you are unable to go to work and eral insurance companies offer these policies, the payment starts only 60 days after the but it’s very unlikely that an agent will try to sell accident. One also has to submit proof, including you one. These low-priced policies are not very a doctor’s certificate for the disability that popular because the agent earns barely `20-30 as prevents one from attending work. commission from selling such a policy. Also, be very clear about the definition of However, you should buy a personal accident disability. When a Delhi-based policyholder lost policy because it plugs an important hole in your his index finger in a car accident, the hospital insurance portfolio. Firstly, it will provide gave him a certificate of 15% disability. Yet, the life financial support to the policyholder if he is insurance company denied his claim because he disabled after an accident. Secondly, the had a cover against total disability. “The policy magnitude of the mishap doesn’t matter; document defines the loss of hand as total even minor ones like falling off a bicycle disability. The loss of one digit, even though it was the index finger, was not and breaking an arm, or fracturing a Sectors covered,” he says. leg while playing football are covered to bet on Permanent total disability is by the policy. when rates fall Page 6 defined as total loss of sight in both If you thought term insurance polieyes, or total loss of use, or dismemcies were cheap, wait till you find out berment of both hands or legs, or one about the premium rates of a personal hand and one leg. Losing one eye is a accident policy. For as little as `225 a permanent, but not total, disability. Ask the year, you can get a cover of `5 lakh. The daily insurance company or agent to explain the cost works out to about 60 paise. However, this is exclusions clearly to you. the rate for a basic cover from a PSU insurer and will only cover death and permanent disability. If you want enhanced protection, you will have to You may also have a group cover shell out more (see graphic). Most companies offer personal accident insuraBundle it with other covers nce to their employees through a group cover. One way to get the agent interested is to buy it However, this is a very basic cover and may not along with your health or motor insurance. offer the benefits offered by a standalone policy. “Since agents get very low commissions, they “I recommend an individual policy only if one usually try to bundle the personal accident cover can afford it and if his company’s cover is with some other insurance product. However, insufficient,” says Jayant Pai, head, marketing, this doesn’t mean that you will pay a lower premiParag Parikh Financial Advisory Services. um, though some companies may give you a You can also buy an accident cover with discount,” says Sanjay Datta, head of undera rider along with a life insurance policy. writing and claims, ICICI Lombard General InsurHowever, these riders come with strings atance. A basic personal accident cover against tached and don’t offer certain covers. death and permanent total disability is already “Since life insurance companies cannot built into a motor insurance policy. You can offer anything but life cover, you will not be enhance the cover by paying extra. covered against other damages, such as hospiPSU insurers offer a maximum cover of `5 lakh talisation expenses,” says Sanjay Tiwari, viceunder a personal accident plan. Private insupresident, strategy and product, HDFC Life. rance companies offer a higher cover and a wider “Riders can never be as comprehensive as a range of benefits, but the premium rates are highstandalone policy,” he adds. er too. You can take a cover of up to 8 times your annual salary. Apart from the basic death and permanent disability cover, you can buy additional protection against partial and temporary disability, even loss of livelihood. “A personal accident policy covers the buyer against costs that can shatter him financially,” says Subrahmanyam B, senior vice-president, health & commercial lines, Bharti AXA General Insurance.
Y
Personal accident cover of `5 lakh
The premium will depend on the cover you select.
Covered
Death only
A B
Covered
(in case the policyholder dies in an accident)
Full cover is paid
Premium
`225
Permanent total disability
(loss of limbs, eyesight or other disability)
Entire insured Premium amount is `175 paid Covered
C D
Covered
Permanent partial disability (loss of one limb
or an eye)
50% of cover is paid
Premium
`100
Temporary partial disability
(fractured limb)
1% of cover is paid
Premium
`250
Total cost of a+b+c+d
} `750
Annual premium figures for PSU insurers. Private insurers may charge more and offer different covers.
A plain vanilla personal accident cover is not very expensive, but it can come handy in case of a mishap. Selfemployed professionals who travel a lot during the course of their work will find this especially useful. Buy one right away so that there is nothing left to chance in your insurance portfolio.
A plain vanilla personal accident cover of `5 lakh can be available for as little as `225 a year, and will cover death and permanent disability. Please send your feedback to [email protected]
