Crisis and disaster can affect our lives at any time and anywhere. An accident is one such nightmare that can break you emotionally, physically, and financially too. An accidental injury needs immediate medical attention and hospitalization. Even if the accident is not fatal and causes severe injuries or physical disability, it may result in a loss of income and unexpected financial loss. A personal accident insurance policy is the only way to deal with this unforeseen crisis.

A good personal accident insurance provides you a lump sum payment in the event of death and total permanent disability and partial permanent disability resulting from an accident.

Need for a Personal Accident Policy

• Very cost-effective insurance tool to keep your family safe and financially secured in case of accidental death or disability.
• An accident may not result in death, but it may just leave you without the ability to earn. In such a scenario, a personal accident policy is really crucial to help you cope with the sudden financial crisis. It helps in bringing your life back on track.
• The best gift you can give your family to lead a normal life even after a tragedy.

Coverages Offered in a Personal Accident Policy

The following are the coverages offered under a personal accident policy:

• Accidental death
• Accidental total disability: This disablement is permanent and irrecoverable in nature. Due to this disability, the insured is prevented from engaging in any gainful employment. For example, paralysis.
• Accidental permanent partial disability: This disablement is similar to total disablement but partial in nature. For example, loss of sight in one eye, loss of one finger, and so on.
• Temporary total disability: This is a disablement that is total but for a temporary period.

Let's understand how the benefits are paid under a Personal Accident policy. The following is a specimen table of benefits on the basis of the sum insured of Rs 5 lakhs, which is the sum insured selected for the purpose of illustration:

Please note that the following varies depending on the insurance company you are choosing.

Additional benefits offered under the Personal Accident policy are:

• Education Grant - In the event of death or permanent total disability, this policy shall pay for the education expenses for the dependent children (maximum 2, up to the age of 25 years), in addition to the capital sum insured.
• Hospitalization Expenses due to an Accident: Any expenses incurred for hospitalization due to the accident shall be covered under the policy up to the limit specified.
• Transportation of Mortal Remains: Expenses incurred for transporting the mortal remains of the insured from the place of the accident or from the hospital to the residence or cremation ground shall be covered.
• Emergency Ambulance: Expenses incurred on an ambulance used to transfer the insured person to the nearest hospital will be covered.

How Much Personal Accident Insurance Should One Opt For

• A Personal Accident policy is recommended for all adults, including housewives. One must buy a PA insurance as soon as one starts earning. Young drivers and frequent travelers should essentially cover themselves with this policy.
• A personal accident cover should ideally be 100 to 120 times your monthly salary.
• The premium and cover also depend on the city you live in, the nature of your job, and the risk involved in your job. If you are into a profession that has high risk, the amount of cover would be subject to insurance company norms, but a ballpark cover could be 40-50 times monthly income.
• If you have a job that does not involve risk, then the multiple can go as high as 120 times your monthly income.
• Let's see an example: If your monthly salary is Rs 40,000, the cover should be more than Rs 40 lakhs. In your absence, your family can invest Rs 40 lakhs (sum assured) in any annuity-type instrument to earn an interest of around Rs 28,000-30,000 a month to manage the loss of income.

Rating Factor

In a Personal Accident policy, the premium is determined on the basis of the occupation. In general terms, exposure to accidental risk at home or at office is the same. But the risk associated with the occupation may vary depending on the nature of the job. For example, a person working as an Accountant is less exposed to the risk as compared to a civil engineer or supervisor working on site where a building is being constructed.

Occupation is classified into three groups:

Risk Group 1: Accountants, doctors, lawyers, architects, consulting engineers, teachers, bankers, persons engaged in administration functions, persons primarily engaged in the occupation of similar hazards.

Risk Group 2: Builders, contractors, and engineers engaged in superintending functions only; veterinary doctors; paid drivers of motor cars and light motor vehicles, and persons engaged in the occupation of similar hazards and not engaged in manual labour; cash-carrying employees; garage and motor mechanics; machine operators; drivers of trucks and other heavy vehicles; professional athletes and sportsmen; and so on.

Risk Group 3: Persons working underground mines, explosives, circus personnel, and persons engaged in occupations/activities of similar hazards.

Exclusions under a Personal Accident Policy

No compensation will be payable under the Personal Accident policy for the following reasons:

• Intentional self-injury, suicide, or attempted suicide
• While under the influence of intoxicating liquor or drugs
• Engaging in aviation while mounting into, dismounting from, or travelling in any aircraft other than as passenger (fare paying or otherwise) in any duly licensed standard type of aircraft anywhere in the world
• Directly or indirectly caused due to venereal diseases or insanity