Recently on a rainy day I was travelling on my two wheeler enjoying the weather. Only travelled a kilometer, when I saw an accident where a body was lying on the road with several injuries on his head. On enquiry I found that a motorbike rider was travelling at a very high speed and collided with a car coming from front. With no fault of the car driver, the person left behind a wife and two children along with huge debt to pay off.
In in one more incident, the same day, the victim was disabled for his life and was unable to earn an income. All these gruesome incidents points towards risk arising due to accident and injuries thereafter. The effect on one’s personal & financial life is difficult to describe. If occurred, it deprives one’s family from a secure future which one has been thinking off.
Hence, there is always a need to make provision for covering risk arising due to accident in order to protect yourself and family from any unfortunate events. Although health insurance reimburses expense on hospitalization it will not serve as a long term aid if disability occurs or will provide a lump sum to family if death occurs. A Personal Accidental Insurance fills this gap by providing benefits which serves the family in longer term. There are comprehensive PA policies from general/health insurers and riders by life insurers which cover risk arising due to accidents.
Before making a decision one should be well aware what is covered under accidental insurance and where you can be denied a claim if arises. Here I have reviewed Apollo Munich Personal Accident Policy which is quiet comprehensive in the coverage.
Whom it Covers
This personal accident policy can cover the proposer, working spouse, children’s and dependent parents with extra premiums. However, there a limit of coverage for each SI for e.g. Children’s are covered up to 25% of proposers SI and dependent parents up to 50% of proposer SI, subject to a maximum limit. The good part of the policy is the coverage to the whole family including dependent parents, which is the worrisome for many individuals. In comparison, a rider in a life insurance policy only covers the proposer up to a certain SI linked to the basic policy.
What it Covers
A personal accident policy like this one covers following risk arising due to accident:
1. Accidental Death: If death happens due to accident then company pays the respective SI to the family. However, do note that the claim should be made within 365 days from the date of accident.
2. Permanent Total Disablement: In Insurance, a permanent total disablement happens where there is a physical separation of the limb above a wrist or ankle or the limb is lost functionally without any hope of improvement after 365 days. In such cases the company pays a % of the sum insured based on which part of the body is affected. For e.g in case of loss of two limb the payment is 100% while if only one limb is lost then the company pays 50% of SI. The claim will be settled if made within 365 days from date of accident. Do remember that if the limb recovery is justified by the doctor then it will not be covered under this category.
3. Permanent Partial Disablement: A PPD occurs when some part of the body is physically separated or becomes dysfunctional without hope of any medical recovery. What differentiate this from a PTD are the parts of the body which are covered. For e.g. Even a thumb separation is counted as PPD and a % of SI is paid to the insured. This is not the case with PTD. However, the amount of claim will vary based on which part of body is lost. The full list can be found with respective companies’ policy wordings.
4. Temporary Total disablement: In this section if the insured suffers an accident and a temporary disability prevents him from performing duties related to his/her occupation then the company pays a % of SI every week maximum up to 100 weeks. The rationale behind this coverage is that the insured will recover after a certain time period and will be in a position to earn income in the future. However do note that only a doctor’s certificate will indicate the amount of disability and the amount of weekly compensation is related to your basic wages.
5. Education Fund: The company also pays 50% of SI for maximum two dependent children to fulfill education requirement. The only condition here is that child is a full time student of an educational institution. No Part time courses will be considered.
6. Accident Hospitalization: This is also one of the biggest benefits where the policy provides coverage for inpatient treatment due to hospitalization up to maximum of SI. This is a reimbursement and is over and above the other benefits.
7. Other Benefits:
The policy provides some additional benefits which are helpful in accidental injuries:
· Emergency Ambulance Charges: The company reimburses the cost of ambulance needed for transporting the insured to the nearest hospital up to a certain amount.
· Family Transportation: The company reimburses the cost of transporting one immediate family member to the hospital where insured is admitted. Do note that this claim is only applicable in case of Accidental Death and PTD.
· Transportation of Mortal remains: If death happens due to accident then the company reimburses the cost of transporting mortal remains from hospital to home or to cremation or burial ground. However, the claim is restricted to 1% of SI maximum up to Rs 100000.
· Broken Bones: If the insured suffers a fracture due to accident then the company pays a % of SI which vary depending on the nature of injury.
· Modification of Residence/Vehicle: If the insured suffers PTD due to accident then the company reimburses any modification done in residence or in vehicle.
Limit Of Coverage
Although the company provides coverage up to Rs 5 cr, the limit of coverage in any accidental insurance policy is linked to the income you earn. Generally, the coverage amount in Accidental insurance is restricted to 10 times of the annual income. So if your income is Rs 5 lakh p.a. you are unlikely to get a cover of Rs 75 lakh.
Claim Process & Key Points to Note
Although the claim process is easier but sometimes it becomes a hassle due to want of documents by the company. Since the company is liable to pay the claim they verify with certainty for any expenses which could have been avoided or reduced or whether the insured has neglected the advice of a doctor. In such scenarios the companies are not liable to pay the claim partly or fully. Hence, you should be very well aware of the claim process and the need of certain documents if any such situation arises. The easiest way is to read the policy wordings carefully and list down all the documents which might be required by the company if any unfortunate event occurs.
Exclusions
Like any other policy there are some exclusion associated with accident insurance policy which one should note clearly to avoid any dissatisfaction later.
· No claim in respect of any preexisting disease, suicide, war, HIV disease, War, Mental Disorders or pregnancy.
· If doctors and insured residence are same the claim is not payable.
· Any non-Allopathic treatment.
These are general exclusions which are applicable to any accident insurance. However, some exclusion are specific to a particular type of coverage, list of which will be given in the policy wordings and should be noted by all policyholders.
Other Policies
There are other policies from different insurers which might have some additional coverage. One policy which is worth mentioning is Tata AIG Secure Future plan where the company pays a guaranteed monthly income for 10-20 years if disability happens due to accident. It can be a good supplement to any accidental insurance benefits.
A comprehensive accident insurance policy will cover major of the benefits including your family members which may not be available in options like riders. The amount of risk may vary across individuals as per the nature of profession. A business person travelling extensively will be on a higher risk than an IT professional with a desk job. However, the after effects of this risk cannot be left on probabilities and so should be covered as per your requirement. Do research extensively before selecting the right product.
Share your views in the comments section…
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Hi Jitendra,
Thank you for wonderful posting!
I plan to take term plan without any riders.
Having said that, I will be taking riders seperately. Surely, Accidental Rider mentioned by you above is must; as I understand, it will cover disasters happened only through accidents. In addition, can you please suggest other policies for Critical Illness, Permenant/Partial Disability (not due to Accident)?
Thanks in advance 🙂
Anonymous
Critical Illness in Health Insurance is given as a rider with basic plan. There are very few specific policies for CI but the features may be restricted like once claimed the policy ceases and you cannot renew e.g.tata aig.However in rider option like in Apollo you can renew with exclusion of the illness already claimed. So my advise would be that CI you take as a rider with your basic health insurance plan.Apollo Munich is a good choice and you can look at Tata AIG Criticare for analysis.
Disability cover specific policies are not there at present. The coverage is available as an extension in most personal accident policies or rider in Life Insurance.Hence you will have to consider these options for covering the benefits.