You would be living in a city, town, village etc. and being a salaried class, you may also be operating daily from home to office for months and years. Thankfully, increasing awareness about term plan, you have already bought the term plan worth Rs 1 crore and also a health coverage plan for securing your life. You had recently bought a home through loan. Unfortunately, while coming from office, you met with a serious accident. Both of your hands got non-functional after the accident. Besides your income stopped, your expense at house, EMI etc. had still to continue. Your term plan could not compensate you because you were not dead. Your health insurance plan covered the expenses to the extent of your hospitalization. At this point of time, despite you have already covered with life and health insurance cover, but they mean nothing if you remain alive with disabilities. Undoubtedly, in your life insurance cover, the nominee gets paid on your demise, but pays nothing on your disability which can be ruinous for yourself and your family, especially if your source of income is gone.

A recent study of our life style reveals that the chances of natural death or getting hospitalized for some illness are far lower than the chances of meeting an accident these days. Therefore, personal accident (PA) insurance can be filled with gaps between life and health insurance in case of any disability arises. It may cover your permanent total disability (PTD), permanent partial disability (PTD) and temporary total disability (TTD). For many people, they may be carrying the wrong impression about the kinds of accidents that will be covered by a PA policy because it gets misnomer as the getting only death accidental benefits. But while buying PA, you need to understand the fine print of what is covered and whether the insurer offers flexibility in case of your disability does not fall within the predefined table. While turning into this post where we are being explained all the intricacies of PA in our deeply-researched article.

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What does PA cover you?

It will be good to know about deep rooted coverage of any personal accident insurance policy before plunge into it. Here is a brief description of each of these covers.

  • Accidental Death (AD): In case of a death due to accident, the policy would pay 100% Sum Assured to the nominee. Instances of exceptional death due to a serpent bite or spider bite, but not mosquito bite may also be termed as ‘accidental’ nature.
  • Permanent Total Disablement (PTD): Permanent Total Disablement means if bodily injury results in loss of two limbs, two eyes, two feet, one hand and one foot, one hand/foot and eye is considered as PTD. In that case, a person is disabled for life would get the insured to 100% of the sum insured. Some insurers pay around to 125% of SI for the same but subject to restrictive policy wordings. While going on the board, ensure that your policy covers not just detachment of hand/feet, but also loss of use of hand/feet.
  • Permanent Partial Disablement (PPD):  The payout will be a certain percentage of the SI, depending on the severity of the accident and policy terms.
  • Temporary Total Disablement (TTD): TTD is an important feature for any personal accident insurance policy because, in the most accidents, the insured person may get temporarily disablement such as the nature or severity of the problem which totally prevents the insured person from attending and performing to the duties of his usual business or occupation. In that case, the insured person can claim loss of his salary/ wages under TTD cover, he can get 1% of the SI per week, subject to a limit, like a maximum of Rs5,000 to Rs10,000 per week benefit up to a maximum of 100 weeks.
  • Medical Expenses Benefit (MEB): MEB is a good and worth going feature as minor accidents such as a fracture which does not prevent you from attending work and may not need hospitalization and, hence, nothing can be claimed under medi-claim and also does not qualify as PTD, PPD and TTD. MEB will make the insurer pay up to a certain limit which will help defray some of the medical costs you incur due to the accident.

How much cover for you?

PA polices are fixed benefit policies whereby specified sums are paid on the occurrence of specified events. This payout is paid irrespective of the related to the expense incurred. Its sum assured can be based on various factors like your income from employment, type of occupation, age as on date of proposal, period of insurance, conditions prevailing at the place from where the proposal is made and so on. It is good to have six to ten times the annual salary as PA cover. For instance, if you have monthly salary is Rs 50,000, and then the PA cover should be between at least of Rs36 lakh to Rs60 lakh. In case of accidental death or disability, investment of Rs60 lakh received from the insurer into fixed-deposits (FD) will fetch an interest of approximately Rs43,000 per month to manage the loss of income.

How much cost you for PA?

Since its premium does not depend on the ages, it would be same for 25 yrs old or 50 yrs old rather it would depend on your working conditions and nature of your job. Insurance companies classify occupation as normal, medium and high risk. Those in high-risk occupations, like circus, jockey or mining, going in for Rs5 lakh sum insured, will have to pay a premium of about Rs1,000 for a PA policy. For a medium-risk occupation, like manual labour, premium payment will be 50% higher than that for a low-risk occupation. If you change your occupation, you need to inform the insurance company so that they can decide the impact on the premium. The premium may increase after age 70 years.

Personal Accident Insurance Exclusion

Every policy has own list of exclusion and, hence, choosing the product with least restrictions or the one having exclusions less probable for your situation is one important parameter for making your selection. Personal accident (PA) policies exclude certain professions or activities. Many PA policies exclude armed forces, paramilitary forces, professional sports persons, hazardous sports (bungee-jumping, jet-skiing, paragliding, etc), merchant navy, airline pilots, off-shore workers (oil rigs/drilling platforms). You should declare your occupation and check specific sports activities to confirm if the policy will cover you. It must be noted that Personal accident policies cover disabilities due to an accident but not cover for long-term disability due to illnesses and disablement resulting from child birth and pregnancy.

Remember, personal accident insurance is inexpensive and useful. One of the most- have insurance cover is a Personal accident (PA) policy which you need in case of disabilities due to accidents. Premiums are low, which is probably the cheapest in the world and you get also lifelong renewal.

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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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