According to recent LinkedIn data, in 2023, accidents in India claimed 1,73,000 lives, left 4,63,300 people injured, and devastated 474 families every day. The most startling fact: 44 per cent of those affected were two-wheeler riders. While one needs to use precautions like using seat belts and helmets to stay safe, it is also important to have insurance cover in case of an eventuality.
Most of us take life and health insurance, but most of us may not have personal accident insurance which is crucial when a person suffers from temporary or permanent disability.
What It Covers
A personal accident policy offers coverage specifically for incidents caused by accidents. This coverage typically includes medical expenses, a benefit for accidental death, and compensation for both temporary and permanent disabilities.
“It covers hospital bills, provides financial support to beneficiaries if the policyholder passes away due to an accident, and offers compensation for permanent or partial disabilities. Many insurers allow personal accident coverage to be added to life insurance policies. This combination enhances protection by covering both life and accident-related risks, giving policyholders greater financial security,” says Narendra Bharindwal, vice president, the Insurance Brokers Association of India (IBAI).
In the event of an accidental death, a personal accident policy typically provides the full sum insured to the nominated beneficiary.
Protection Against Disability
“For disabilities, the compensation amount varies based on the severity of the injury.,” says Bharindwal.
For example, if the policyholder suffers a permanent total disability, they will receive a full payout of 100 per cent of the sum insured. In cases of permanent partial disability, a percentage of the sum insured is paid, depending on the extent of the disability—for instance, 50 per cent for the loss of a limb. Temporary total disability is also covered, with weekly payments provided for a specified period to help manage expenses. This structured benefit ensures that individuals and their families receive essential financial support during challenging times, helping them cope with unforeseen hardships.
“Many personal accident policies offer an income protection feature. If a policyholder is permanently disabled and unable to work, they may receive compensation that replaces lost income. This benefit is invaluable for individuals needing financial assistance while recovering and adjusting to their changed circumstances,” says Bharindwal.
Select Appropriate Sum Assured
Selecting an appropriate sum assured involves evaluating income and financial responsibilities. A good guideline is to choose a sum assured equivalent to about 72 months of income. For non-earning family members, a lower sum, generally 50 per cent of the earning spouse's cover, may be sufficient.
