The utilities of personal accident insurance

Tags: Insurance
By definition, accidents are unpredictable and can cause serious damage. Accidents can be caused due to many reasons. Apart from road mishaps, accidents can also be caused by electrical equipment, heavy object and fire or even by seemingly harmless objects like staircase, table or chair. Everyone — from small children to youngsters to middle-aged couples and retired elderly parents — is vulnerable to accidents and despite all possible precautions, they do occur.

While a majority of the accidents that occur are not major, some do have serious implication on an individual’s physical as well as financial health. Such mishaps take only seconds to turn life upside down.

Accidents can even drain an individual’s lifetime savings, leaving families in a difficult situation without resources or help. Hence, securing the family’s future is of utmost priority. A good way to protect yourself and your family is a personal accident insurance (PAI).

Personal accident insurance is a low-premium personal accident policy. They are also offered as add-ons with life and motor insurance policies. You also get a PAI with some credit cards. However, these PAIs come with a long list of terms and conditions that limit its scope and utility. But PAIs offered by non-life insurance companies provide better coverage at a reasonable cost.

A life insurance policy pays a lump-sum amount in the event of death of the policyholder while a health insurance policy offers to pay the hospitalisation cost in case the policyholder needs to be hospitalised for some medical reason. PAI comes handy if an accident results in the policyholder’s disability, temporary or permanent, thereby impacting the individual’s earning capacity.

While a PAI is quite similar to health insurance in terms of paybacks, it costs much less due to its focused coverage. A PAI is inexpensive, so one can afford it without any major drain on his pocket. The cost of a standard PAI with a cover of Rs 15 lakh is approximately Rs 3,000 per year. The premium does not depend on age. Hence, it is the same for a 25-year-old and a 50-year-old individual. The premium on personal accident insurance policy depends on one’s working conditions and nature of job. And yes, a personal accident insurance plan can also be extended to include the entire family under a single policy. It ensures the financial stability of an individual and his/her family in the event of an accident.

The policy covers death of the individual as well as physical injuries. It covers different types of accident, including vehicular accidents on roads, slipping from the stairs, fall from a height, breaking an ankle, hip or bone during any sporting activity or getting electrocuted by a gadget. A personal accident insurance policy offers cover to policyholder against all such eventualities. The premium is a marginally higher if the insured opts for a disability cover, but the benefit will be immense due to a comprehensive cover against any disability.

— The writer is the executive director of HDFC ERGO General Insurance Company

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