Sachin broke his leg while playing football on Sunday with his buddies that left him temporarily disabled. He has bought adequate life insurance cover on his life and a health insurance plan for his whole family but ignored personal accident. You buy a life insurance to cover risk to your life and a health insurance plan to cover to your health. What if like Sachin you have an unlucky day in your life. This is where a personal accident policy can come to your rescue. Unlike life insurance, Personal accident policy is not sold aggressively for a simple reason that premium is low and agent’s commission is limited. Most of the time accident cover is bundled with motor insurance with limited benefits. Ignoring a personal accident policy may become costlier sometime.
Scope of cover
A personal accident policy provides compensation in the event of injuries, disability or death caused solely by violent, accidental, external and visible events. Scope of cover under these policies is not limited to road or train accident but includes even snake or dog bite. Standard exclusions like self-inflicted injury or injury due to the use of intoxicants are applicable.
Benefits under the policy may range from compensation against death only to permanent disablement or temporary total disablement. Policy may also cover benefits like daily or weekly hospital cash benefits, expenses incurred for carriage of dead body from place of accident to the residence or may pay education fund for dependent school going children. Full sum assured is paid in case of total permanent disability or death but in case of permanent partial disablement compensation is limited to a part of the total sum assured under the policy. All plans don’t offer the same benefits. One has to take care of basics like selecting the right policy as per ones need and ensuring that policy is renewed regularly to avail the benefit of such policy should the need arises. One point of confusion among buyer is the difference between total permanent disablement (TPD) and partial permanent disablement (PPD) .TPD means loss of a hand, leg or eyesight while PPD means loss of a finger or toe in insurance term. While considering a personal accident policy it is important to ensure that your policy covers maximum eventualities including partial permanent disablement.
Who should buy the policy
Every individual should consider personal accident policy as it covers risk of permanent disability which may be worse than death. Any adult residing in India can buy the policy. Age at entry as well as at which cover ceases may differ from one plan to another. Some insurers don’t include minor children in the plan. People who are prone to road accident or engaged in work that requires physical labour like operating heavy machinery and work in dangerous situations like construction must buy such insurance cover on their life.
Premium paid towards personal accident plan is not eligible for tax benefit. In some plans selected benefits of personal accident have been bundled with health insurance. Premium paid towards such policies iseligible for claiming deduction U/s 80Dof IT act but one should understand that these plans are not substitute for personal accident plans.
It is always advisable to read the plan brochure before signing the proposal and go through the policy document as soon as you receive it to understand the fine prints of the policy. A personal accident policy is strongly recommended to insure personal risk at an affordable cost.