Critical and Personal Accident Covers

A Must in Your Protection Portfolio

Add personal accident and critical illness covers to your protection portfolio to ensure complete financial security against risks.

 That life and health insurance policies are critical to protect oneself and dependents from unforeseen exigencies is a widely accepted view. However, not many stop to think of the major risk that can deal a body blow to finances during one’s lifetime—that of being disabled in an accident, affecting employ-ability and thus, income flow. A large life or health cover would be of little help in making good the loss of income. The only solution to this conundrum is to buy a personal accident – or accidental death and disability – covers. Disabilities could include dismemberment of any body part, loss of sight or hearing.

A simple health cover of say Rs 5 lakh could also prove to be inadequate should one contract a major illness like cancer or renal failure, which entail huge treatment costs. This is where a critical illness of say Rs 20-25 lakh could help, shielding your finances from the impact of  treatment expenses.

The Workings

 A personal accident policy, like a term cover, is a fairly uncomplicated product. It does not promise any returns during the policy tenure or at maturity, but compensation in case an accident leads to the life assured’s death or disability. The product is also quite cost-effective. For example, a 35-year-old buying an independent accident policy of Rs 10 lakh, which also covers disabilities, will have to pay a premium of around Rs 1,500 a year, depending on the insurer and plan chosen. You can also choose to buy this cover in the form of a rider attached to your life insurance policy. The key advantage here is the convenience it offers at the time of renewal—you can renew both at one go. Do note, however, that should you discontinue your life policy and decide to switch insurers, your personal accident rider will also cease to exist. Also, some policies, depending on the variant chosen, cover education expenses of children in case of death or permanent total disablement of the insured.

A critical illness cover too is triggered only in the event the policyholder is diagnosed with major ailments specified in the policy. Unlike regular health plans that reimburse the actual hospitalization expenses, it hands out a pre-defined sum upon the diagnosis. Even if your regular health cover can shoulder a large part of the expense burden, the critical ailment plan will come in handy to take care of any loss of income or recuperation and lifestyle modification costs.

Read the Fine Print

While a personal accident policy is a simple product to understand, you need to understand the nitty-gritties before choosing one. Read the clauses that trigger admissible claims carefully. For example, some policies pay weekly compensation in case of temporary total disability, while others make a payout only if the disability is permanent in nature. Besides, if the life assured loses say one eye or limb, the claim disbursal might be restricted to 50 percent of the sum assured. The sub-limit for say burn-related injuries could be Rs 50,000 even if your overall sum insured is Rs 10 lakh. Moreover, in case of temporary total disability, the weekly payout could be capped at 1 per cent of the sum assured, up to say 100 weeks from the date of accident.

Likewise, in case of critical illness cover, go with a policy that has broader terms of coverage rather than one that promises to cover a large number of ailments. Also, keep an eye on the percentage of payout promised in some cases. For example, early stage cancers.

Buying a cover after evaluating the exclusions and sub-limits will ensure that you will not have to regret your purchase later.

 Who should consider personal accident policy and why?

 A personal accident policy, without doubt should be the first insurance policy one should invest in when one reaches adulthood or/and regularly starts venturing outdoors due to personal or professional commitments.  More and more people are exposed to the risk of accidents. Indian roads are amongst the most unsafe in the world. Such fatal accidents can cause huge hospitalization expenses and corresponding medical bills, thereby vanishing one’s lifelong savings.

A personal accident insurance cover not only monetarily compensates for the death of the insured caused due to an accident but also extends financial support when the insured has been immobilized due to the accident, irrespective of the physical immobility being permanent or temporary in nature. The cost of premium for choosing a personal accident cover is minimalist when compared to health insurance.

What are the main features  of a Personal Accident policy?

 Sum insured, policy coverage, benefits, add-ons available, and exclusions are the key factors one should keep in mind while buying a personal accident policy. Generally, a personal accident policy covers bodily injuries or disability or death caused solely by violent, accidental, visible, and external means. Some of the common features of personal accident policy across all the insurers are accidental death, permanent total disablement, permanent partial disablement and temporary total disablement.

How is a Personal Accident policy different from a Critical Illness cover?

Unlike a personal accident policy which is a fixed benefit plan covering bodily injuries or disability or death caused solely by violent, accidental, visible, and external means, a critical illness policy is a defined benefit plan. It pays a lump sum amount on diagnosis of any pre-specified life-threatening disease such as cancer, first heart attack, multiple sclerosis, etc. (number of life threatening disease may vary for different insurers).

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