What Does a Personal Accident Policy Cover and How Does It Work?

Personal accident insurance includes a loss to an individual due to an accident resulting in permanent/ total disability or death. It will include compensation to the policyholder in case of an accident when travelling by air, road, rail, drowning, or collision. Personal Accident Insurance not only includes the receipt of compensation but also provides financial security to the family members in case of an accident.

Eligibility Criteria

• The minimum age of the policyholder should be 18 years.
• The maximum age of the policyholder depends on the insurer.
• No pre-existing conditions that can cause accidents should exist.
• Only accurate information related to occupation and nature of work should be provided.

Difference between Personal Accident, Health and Life Insurance

Let us have a quick look at the differences between Personal Accident, Health and Life Insurance:

Inclusions

• Accidental Death

The amount of the sum assured will be paid to the policyholder’s nominees in the case of the accidental death of an insured.

• Permanent Total Disability

A specific amount of the sum assured will be given to the insured in case of permanent total disability or impairment that occurs due to an accident.

• Permanent Partial Disability

A specified percentage (%) of the sum assured is paid to the policyholder in case of accidents resulting in permanent partial disabilities.

• Temporary Total Disability

A weekly allowance is paid to the policyholder to compensate the loss in case of accidents resulting in temporary total disability, hence making the insured bedridden.

• Loss of Income

A fixed amount is provided against the loss of income incurred due to job loss due to accidental injuries.

• Children Education

It covers the cost of children’s education in case of an uncertain demise of the policyholder due to an accident.

• Loan Protector

Protection against the loan is provided to repay the loan in case of unexpected death or permanent disability due to an accident. 

• Transportation of Mortal Remains

The insurance company will pay the amount of expenditure incurred on the transportation of his mortal remains to the nominee in case of the death of a policyholder resulting from an accident.

• Cremation expenses

It includes the policyholder’s funeral expenses.

• Broken Bones

Compensation would be received in case of fractured bones due to an accident.

• Burns Benefits

Compensation would be received in case of burns due to an accident.

• Hospitalisation expenses

The medical expenses spent during a hospital stay due to an accident are also covered.

• Life Support Benefits

The life support charges incurred during hospitalisation due to an accident are also included.

• Ambulance Expenses

The ambulance charges are also included.

• Family Transportation Allowance

The transportation expense incurred to reach the hospital out of the city where the policyholder is admitted is also covered.

• Home Alteration or vehicle Modification benefit

In case of permanent total disability occurring due to an accident, the policyholder will receive the expenses incurred on home modification or vehicle repair. 

Exclusions

• Natural death
• Influence of intoxicating drugs or liquor
• HIV AIDS
• Mental disorders
• Breach of law with criminal intent
• Intentional self-injury, suicide
• Pre-existing disability/accidental injury
• Childbirth and pregnancy
• Terrorism
• Adventurous or sports activities
• Being involved in war activities
• Participating in the naval, military and air force activities

Difference between Personal Accident and Term Insurance Plan

When it comes to protecting the financial future of your family members, it becomes important to understand the differences between a Personal Accident and a Term Insurance Plan. Though both are kinds of life insurance, below is a comparison that will help you finalise the Best Term Insurance Plan according to your requirements:

Conclusion

A person should go for personal accident insurance of a minimum of 100 times the monthly income. It will cover all the circumstances, such as children's education expenses, repayment of loans, children’s marriage expenditure, earnings for family members, etc. It also provides tax benefits as premiums paid are eligible for tax deductions u/s 80D. This amount can be claimed up to a maximum of INR 25,000 in case of self, spouse, and children, and this limit will go up to INR 50,000 in case of individuals above 60 years of age. Also, in case of accidental death, the claim received would be tax-free u/s 10(10D) of the Income Tax Act, 1961.