Personal accident insurance: Policies, types, features and benefits – Moneycontrol


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Life is truly unpredictable. One moment you may be living it up and the next moment you may meet with an accident.  Accidents can happen at any time and anywhere. Unfortunately, accidents do not give you prior warnings. The statistics of accidents in India are very alarming. As per data from the Ministry of Road Transport and Highways, deaths due to road accidents in India increased to nearly 1.49 lakh in 2018 when compared to the data of 2017. A total of 4.61 lakh accidents took place in 2018. Uttar Pradesh registered the maximum number of fatalities.
Any such tragedy can leave your finances in the lurch. That’s why it recommended getting a personal accident insurance policy. The accident insurance policy provides financial assistance to the insured and the beneficiaries in case of accidental death and bodily injuries. Additionally, such policies also provide hospitalization cover, hospital confinement allowance and medical expense cover.
There are two variants of personal accident insurances:
Individual accident insurance: This accident insurance policy provides insurance benefits to an individual in case of any accidental damage. Typically, the insurance covers accidental death, loss of limbs or sight, or other permanent disabilities resulting due to an accident. This is best for self employed, salaried persons and persons who are engaged in a business. Certain insurers also provide education benefit as part of the policy. In case of death or a permanent total disablement claim, the child is eligible to receive support for education at a government approved educational institute.
Group Accident Insurance: This personal accident insurance is often obtained by employers to obtain coverage for the employees. These policies are good incentives for small enterprises as the cost of obtaining them is very low. Group accident insurance only provides limited benefits when compared to an individual accident insurance plan.  However, most insurers provide complete cover in case of death or temporary partial disablement or permanent total disablement of the insured due to accidents occurring anywhere in the world.
Before you decide to get a personal accident insurance, it is useful to understand the key features and benefits of such policies.
This policy provides cover in case of unfortunate event of death of the insured due to an accident. The nominee is entitled to the entire sum. The policy even provides cover for permanent total disability, permanent total disability, permanent partial disability and temporary total disablement. Another interesting feature of a personal accident insurance is that it also provides cover in case of temporary total disablement. Certain policies also provide cover the hospitalization due to any accident as well the cost of transportation of mortal remains in case of death.
In addition to the above, many policies also provide a cover for dismemberment of any kind that happens due to accident. Certain insurers have predefined percentages and ratios in which the benefit will be payable to policyholders who suffer dismemberment of any organ such as limbs, hands, eyes, ears etc.
Another optional coverage provided by certain insurers is the cover for the possible death or dismemberment on account of burns. Burns can be caused due to chemicals or fire, especially if the policyholder works with hazardous chemicals. If the policy holder suffers any burns, then the cost of the treatment of the burns will be covered under a policy for personal accident insurance.
If you are in the market to buy an insurance policy, you will be truly spoilt for choices. There are several portals online which serve as the marketplace for finding the right insurance policy. These are essentially insurance aggregators.  These portals are registered with Insurance Regulatory and Development Authority, the insurance sector regulator in India. These marketplaces or portals offer you a host of options. You need to provide certain basic details such as the cover that you are looking for and the premium you wish to pay. It also allows you to compare the policies offered by several insurers which in turn help you to decide which the best policy to go ahead with is. Some portals even offer attractive discounts on the payment of premiums.  Instead of contacting several brokers, you can now easily glance over many policies with just a click of your mouse button.  Many portals are also available as an application on your phone.  So buying insurance policy online is easier than ever before.
Other common inclusions are: Medical expenses/ hospitalization charges, Child education support, life support benefit etc.
The process to initiate a claim under a personal accident insurance is straightforward. We have set out below the process you must follow to make a claim:
Death during an accident is also covered under a policy for personal accident insurance. It is important to keep your family informed of the policy terms. Death of a loved one can leave the family devastated. Prior information about insurance policies and terms etc. would be helpful. Further, in case of a death, the death certificate, FIR and the post mortem report, if any, has to be submitted.  If your claim is on the grounds of impairment, you would have to submit your medical report and hospital bills as well.
If you are buying an insurance to save on tax, don’t. Tax benefits should not guide your decision. After all, a policy for personal accident insurance is a cushion for any unforeseen events. Specifically, Section 80D of the Income Tax Act 1961 does not provide any tax benefit for the premium paid for personal accident insurance plans. The benefit is not extended for any coverage – whether accidental death or permanent or temporary disabilities.
However, keep in mind that there are ways to enjoy tax benefits. One can claim the cost of a premium on the insurance against loss of income. Claiming the tax benefits on insurance premium can be a complicated process. It is advisable to consult a good chartered accountant. You can enjoy the benefits if you demonstrate that premium is paid to protect taxable income.
If you opting for a personal accident insurance which is combined with another policy, tax treatment and availing tax benefits can be difficult.
It is important to understand the differences between a mediclaim insurance policy, life insurance policy and a personal accident insurance policy.
In case of a life insurance, the benefits are available to your nominee only when you pass away. A mediclaim policy is only available to cover the hospitalization and other medical expenses. However, a personal accident insurance is much more comprehensive. It protects the financial risk due to accidental permanent total disability or accidental death of an earning family member.
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