In India almost 12 lakh people die due to road accidents every year and those injured number nearly half a crore. As these accidents increases, we need to protect ourselves with a personal accident cover.
What is it?
This is primarily a pre-underwritten product and no medicals are called for.Personal accident insurance policies were earlier issued for one-year terms like any other non-life insurance product. However, nowadays, buying one for a 5-year term is not a problem. The minimum and maximum age at entry is 18 to 70 years of age in most cases.
Benefits
The policy offers a sum assured in case of death of an insured person due to an accident. It also provides for compensation in case of permanent and total loss of limbs, sight, due to an accident. Some insurers also cover the insured in case of death or permanent disability due to acts of terrorism. There are no maturity benefits available under this policy.For an additional premium, one can add cover to family members. There are options available to enrich the cover by subscribing to add-on benefits.And a no claim may fetch you a hike in your sum assured at no extra premium as a reward when you renew the policy.
Exclusions
The prime exclusions are suicide, military service, war, illegal act, AIDS, dangerous sports and diseases. Always insist on the list of exclusions before you buy a policy.
Where does it fit?
The product works best when you have an existing life insurance cover. In no way can a personal accident insurance cover be treated as a replacement of life insurance cover. It is difficult to buy an accident cover for large sums along with life insurance policy as the accident cover cannot exceed the basic life cover.Also the statutory norm that the ‘rider premium’ cannot exceed 30% of the ‘basic life cover premium,’ in case of with profit plans, makes it costly to ‘buy insurance’ in large sum.
Although a personal accident insurance may not benefit you with tax exemption or a return on maturity, do not avoid buying one.The need for insurance is high when you are at the start of your career and have loans to pay for.
However its a good solution to get a Personal accident insurance clubbed with health and pure term life insurance, to cover your needs.
