What is personal accident insurance and should you have one?

Henil Shah
/ Categories: Mutual Fund, MF Unlocked
What is personal accident insurance and should you have one?

People usually relate the word accident with road accidents. However, that’s not the case. An accident can be any situation such as a dog bite or falling from stairs or injury due to fire or the like. All these are termed as accidents. Every year in India, near to 4,000 people die because of the blasts of a gas cylinder, over a lakh die due to road accidents, etc. When an accident occurs one cannot ignore the trauma and restore the emotional loss. However, the financial losses can be restored.

Personal accident insurance helps you to restore the financial losses that occur due to accidents. It covers the insured for accidental deaths, partial or total disabilities due to accidents. Not just a car accident, personal accident insurance covers various other accidents as well.

We can see a trend these days that people go for the personal accident riders provided by the life insurance companies. Generally, they cover accidental death and/or permanent disability. Such riders usually priced as Rs. 1 per 1,000 sum assured. Say, for instance, your personal accident sum assured is Rs. 10 lakhs then your premium for the rider would be Rs. 1,000. Though this may vary from one insurance company to the other.

However, it is better to have standalone personal accident insurance from a general insurance company and not as a rider. The reason being standalone personal accident insurance would be able to provide high sum assured along with additional benefits. They can cover not just accidental death, but also permanent total disability, permanent partial disability and total temporary disability. The premium depends on the sum assured and the benefits opted. For an extra premium, some insurance companies may also provide hospitalization cost reimbursement, cover EMI payments, some insurance companies also have an option of paying a fixed sum every month rather than paying a lumpsum amount, etc. Such customizations make standalone personal accident insurance a better value proposition.

The premiums of personal accident don’t change with change in age. In fact, it depends up on the insured’s occupation. Say, for instance, a person is working in a factory may have a higher premium than a person with a desk job. Though personal accident policies don’t account for tax benefits on premiums paid and have a long list of exclusions, it is prudent to have a personal accident cover due to the benefits that it offers in case of an accident. But it does gives you a no claim bonus for every claim free year.

So, now the question is should you have one? Yes, definitely one should have it, it is not just important to cover your life and health but also a stage between it wherein you have come across a disability due to an accident which has a direct impact on your income. People who head single-income families, people with occupations that are more prone to accidents should consider having a personal accident policy at first as accidents may affect you more financially.

Rate this article:
5.0

Leave a comment

Add comment

DSIJ MINDSHARE

Mkt Commentary28-Mar, 2024

Mindshare29-Mar, 2024

Multibaggers28-Mar, 2024

Interviews28-Mar, 2024

Multibaggers28-Mar, 2024

Knowledge

General26-Mar, 2024

MF25-Mar, 2024

General18-Mar, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR