All You Want to Know Before Buying Personal Accident Policy

Introduction

Life insurance policy covers a person's life against premature death and provides benefits to his/her beneficiaries. It does not cover a person if he is injured in an accident and becomes disabled, preventing from continuing in his former occupation. For this Personal Accident policies are around. Personal Accident policy covers a person's life in case of accidental death and provides compensation in case of disablement.

Features of Personal Accident cover

Since anyone can fall prey to accidents at any time Personal Accident policies are open for people across age groups. Most insurance companies cover people in the age group from 5 to 70 years. The proposer who buys the policy must be over 18 years like in any legal contract. Like health insurance the policy must be renewed year after year.

The sum insured usually depends on the proposer's income. Up to 10 times the annual income may be offered as sum insured. For dependents the sum insured is offered as a percentage of the sum insured of the proposer, say 50% of it. Premiums don't depend on your age for the simple reason that accidents are not specific to age among adults. Instead they're linked to the potential risk you are frequently exposed to which will most likely depend on your work conditions.

The policy covers both accidental death and disablement. Disablement can include loss of limbs, sight and hearing. Some insurers may only cover permanent total disability while others may cover permanent partial disablement and still others may cover temporary disablement. Some insurers may provide hospitalization cash benefits.

Bear in mind that the onus of proving cause of death or disablement by accident is on you. There may be clauses that state that benefit is payable only under certain conditions like if death or disability occurred as a direct result of the accident, which many people may not pay attention to before buying a policy. The insurance guys have tough lawyers, time and money and they will try every bit possible to avoid paying the benefit.

What's not covered by a Personal Accident policy

Generally speaking if some activity or profession exposes you to high accident probability that will have been excluded from being covered. Personal Accident insurance does not cover claims arising out of sicknesses, suicide or attempted suicide and self injury. Since drinking and driving is prohibited they don't cover accidents caused under alcohol or drug influence and also any kind of accident caused where you have broken a law with criminal intent or if the person is insane!

If the accident is in any way related to childbirth or pregnancy it will be excluded. If the accident is caused in war or by use of nuclear weapons or treatment using nuclear components it cannot be claimed for benefits.

Insurers do not cover occupational risks like in case of professional sports persons, armed forces, paramilitary forces, airline pilots, merchant navy, off shore workers and those who involve in what is called hazardous sports including para gliding, bungee jumping, jet skiing and so on. If you want insurance covering any of these you must specifically seek companies that cover them in personal accident policy or look for customized policies that cover them.

Who needs Personal Accident policy? 

As long as you have adequate cover in a life insurance policy buying a separate accident death cover is a duplication and completely unnecessary. What is needed is a disability cover. The problem is most insurance companies club accidental death cover and disability cover.

Personal Accident policy as rider

Many life insurance policies and medical policies offer Personal Accident insurance as rider policies. This is a bad way to cover accident disability risk. You can get far more coverage for lesser premiums when you buy them as standalone policy. Premiums don't depend on your income - since your accident risk does not depend on income- instead it varies with your type of occupation.

People in administrative jobs, doctors, lawyers, bankers, teachers, engineers, etc are in minimal risk. Builders, supervising engineers, vets, drivers and labourers are exposed to more risk. People working in mines, units making explosives, electrical installation and those engaging in professional sports are in the highest risk category. Personal Accident policies can be bought from one of the general insurance companies.

Before you decide on any one insurer it is advisable to check whether that particular policy excludes a specific risk you may be frequently exposed to. Don't miss reading the 'policy wording' as it is called, for details of what is covered, exclusions, premiums, claims procedure and so on. Prefer to buy an online policy as that will mean lesser running around and often much lesser premiums.


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