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You may have taken extra care with your insurance policy. But chances are that it may not meet the expenses resulting from an accident. So get wiser…

What are the must-haves in your insurance kitty? A quick response probably could be a term cover and mediclaim. But have you thought about paying premium for a personal accident cover separately?

What is a personal accident cover? As the name suggests, it is a cover for an individual and his dependants from risks of accident. This includes the income loss resulting out of the treatment that follows. Take the example of Navin Sheth, a software professional, who drives to office everyday. Recently, he fractured his hand in an accident, which kept him out of action for a couple of months. The medical treatment cost him almost Rs 1 lakh. Thankfully, the personal accident policy came to his rescue, which compensated for the treatment as well as the loss of income.

Any accident drains out your finances as you have to meet your healthcare costs, plus there could be an income loss till your recuperate. You may have accumulated leave. But if the disability lasts for several months, then this cover could come in handy.

Mr Sheth has a term cover and also a mediclaim. But he still signed for an accident policy. The latter covers any external and visible bodily injuries arising out of accidents. It basically covers four contingencies such as accidental death, permanent total disability, permanent partial disability and temporary total disability.

Who needs it?

Any individual who has to travel to work is prone to the risk of accident. While a term policy could cover the risk of dying, what is often neglected is the disability and consequential loss of income from an accident.

While for people practicing risky professions - circus ring master, miners, scuba divers or even a professional paraglider - it is advisable to have this policy, it shouldn't stop individuals like Navin who drive to office or are frequent travellers.

Facts and figures

The premium (one time) for a personal accident insurance policy (PAIP) with Rs 3-lakh cover would work out to Rs 1,125 for a 3-year period, Rs 1,500 for a 4-year period and Rs 1,875 for a 5-year period. This would cover accidental death as well as permanent disability resulting from the accident. This is for people who fall in the age bracket of 5-70 years. The premiums are uniform across various age categories. However, most insurers give discounts (usually 10%) if you cover all the family members.

Usually, insurers charge a flat premium. But some state-owned insurers charge a fee according to risk profiles, which is pre-determined by the company itself. For example, desk job professionals such as teachers, accountants and lawyers are categorized as normal risk by the insurers. Field job professionals such as builders and contractors fall under medium risk category.

During the policy tenure, if an individual develops a temporary disability emanating from an accident, the policy pays a fixed percentage of the sum insured as compensation. This percentage depends on the type of disablement. However, this amount is capped at a maximum of Rs 5,000 on a weekly basis.

Will a term cover suffice?

You have the option of signing up for a term cover and add personal accident cover as a rider. This will definitely work cheaper. Usually, if you pay an additional amount, say Rs 500, you can get an accidental death rider along with total disability. The usual limit for the rider is 10% of the sum assured for the whole life of the policy. Then, does it make sense taking an individual accident policy? The answer is that there are limitations as the extent of sum assured one could take. Second, once the claim is made, the rider ceases to exist. You cannot add that rider again to your policy. So, don't overlook this cover. After all, it doesn't really pinch your pocket.