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Most of us are aware of the need of purchasing life insurance and health insurance. However, very often one important risk cover is under-represented in most individual portfolios – accident insurance. When asked whether they have bought accident insurance, some immediately point to the accident disability rider they have bought along with their life cover. However, they might have missed considering taking a standalone personal accident cover from a non-life insurance company.
Many of us relate the term accident with accidents arising out of collision of vehicles on the road or transport related accidents. However, it is not always the case. Accident insurance, or personal accident insurance as it is known in the industry, is an important cover one must have. Accident for the purpose of insurance includes many incidents beyond road accidents. There are multiple situations in life that make us vulnerable to loss.
While accident riders offered by life companies do provide some additional protection, non-life companies also offer standalone personal accident cover with several protection features against untoward incidents.
Let’s look into the same of the aspects of having accident insurance cover.
Key differences
A standalone personal accident insurance plan from a general insurance company is more comprehensive in nature and covers a higher number of accident-related risks as against an accidental death benefit rider available with a term plan. It has a wider scope of coverage as it offers cover for accidental death, permanent total disability, permanent partial disability, temporary total disability, accident hospitalisation, education grant and transportation of mortal remains.
On the other hand, an accidental death benefit rider attached to a term plan provides cover against only accidental death and accidental total disability in some cases. The rider will offer a lump sum amount to the nominee in case of untimely death of the insured. This includes accidental death. Loss of income due to disability or inability to work is not covered. “In most of the plans, to get additional coverage like accidental permanent disability, one will have to attach another rider which covers this risk. Therefore, for every additional risk, an appropriate rider will have to be attached to the base term policy,” says Mahavir Chopra, Director, Health, Life & Strategic Initiatives, Coverfox.com.
Underwriting norms
Life insurance companies go for medical and financial underwriting while issuing life covers. That means one may have to go for medical tests and have to submit one’s income tax returns of past years to prove his earnings capability. One gets to buy accident benefit if and only if he gets the life cover. That makes many in the higher age bracket of 45 years and above to go without cover or with inadequate sum assured.
Non-life insurance companines however rely on financial underwriting only. And hence acquiring the accident insurance is possible even for individuals in high age group.
Which is more affordable?
One must keep in mind that while there is wider coverage under standalone personal accident insurance, it might also require a slightly higher premium payment.
The indicative difference of premiums for both is tentatively as under (as per data provided by Coverfox):
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