According to experts, the problem can be tackled if individuals spare a little time to understand what they really need from an accident policy and what the policy really offers.
"In case of an accident, an individual may be exposed to three important risks – loss of income, loss of health and loss of asset. Your insurance policy should take care of these losses," says Sumeet Vaid, founder and CEO, fFreedom Financial.
Here is a scenario to bring home the point quickly: say an individual meete with an accident while driving a car and is hospitalised for a couple of weeks. Naturally, it means loss of income and spending money on the treatment of injuries. Then, of course, the car may need repairs. The motor insurance policy will take care of the car. And the individual's accident cover should take care of treatment as well loss of income. So, now, get into your car and start shopping for the cover.
COVERS WITH LIFE POLICY
"Under the current regulatory framework, life insurance companies cannot sell accident cover as a standalone policy. But they offer it as a rider with the life insurance policy at a nominal cost, making it easier to purchase," says Aneesh Khanna, senior vicepresident – head, marketing and product management, IDBI Federal Life Insurance Company. However, the stipulation that the premium payable for riders other than health insurance benefits cannot exceed 30% of the premium payable towards the basic sum assured limits the amount of accident insurance you can buy. Consider the example of an individual with a life insurance cover of . 1 crore and an accidental death cover of . 20 lakh. If the person meets with an accident and dies, his survivors will get . 1.2 crore as death benefit. The biggest drawback, as you can see, is if you live to tell the tale of the accident, you will not get any money for hospitalisation expenses or to compensate you for your loss of income.
GENERAL INSURANCE – GROUP
POLICIES
Most individuals get to know about personal accident insurance for the first time when their employer offers it to them as an additional benefit. Many companies, banks and credit card companies are increasingly buying group personal accident insurance from insurers these days.
"Buyers can pick and choose the benefits and link them to variables such as annual salary or credit limit on the credit card," says Sanjay Radhakrishnan, zonal vice-president, west, Bharti Axa General Insurance Company.
For example, a bank may give a personal accident insurance to all its credit card holders or bank account holders. Sometimes it is a fixed sum payable on the death of the credit card holder and sometimes it can be variable, say three times the credit card limit. In some cases, it is an optional benefit available to customers of the bank, and customers can buy it by paying a premium.
"Group personal accident insurance plans are customised as per the needs of buyers – employers or banks — and not as per the needs of the covered – that is you. The terms and conditions that govern the policies are also not communicated in detail to the insured person in many cases," points out Sumeet Vaid.
INDIVIDUAL PLANS FROM NON-LIFE INSURERS
There are many options that cater to your specific needs. It starts with a basic cover that offers a fixed sum if the insured person dies in an accident. It also offers money if the insured loses limbs. For example, if the insured loses a hand, he/she is entitled to get 50% of the sum assured. The comprehensive insurance package also covers temporary total disability, pays for broken bones, allows modification of house, etc (see table). A word of caution, though. There are no standardised solutions here. Each company will have different benefits and different definition of each cover. It is essential to read through the policy wordings to understand it better.
HOW TO CHOOSE
As you can see, accident cover benefit with a life insurance plan can't be your total solution to problems arising from an accident. "Life insurance companies offer limited sum assured for an accident cover as an additional benefit with the life cover. But general insurance companies offer far higher cover with many health-related benefits in a single policy," says Sumeet Vaid.
Also, it is always better for you to buy an individual cover even if you have a group cover from your employer. An individual plan would rescue you if you meet with an accident when you are in between jobs. Your group cover will be over the moment you leave the organisation. And you will get the benefit of the group cover offered by your new employer only after you join the new company. There is also another compelling reason to go for an individual cover separately. "Being a benefit policy, even if you have two covers – the first, a group cover, and the second, an individual cover – both personal accident insurance policies will pay in case of an unfortunate event," says Sanjay Radhakrishnan.
As you can see, your decision should solely depend on your needs. For example, a young employed executive who typically takes public transport may want to buy a cover that pays in case of a terrorist attack and offers double the sum assured in case of an accidental death while travelling in a public transport. A salesman, who has to travel a lot, may want to buy comprehensive cover as he is exposed to higher risks. "You may choose to purchase additional benefits such as hospital bills' reimbursement arising out of an accident and hospital cash benefit," says Sanjay Radhakrishnan. These can be looked as supplementary covers, when you are young and have a small sum assured under your medical insurance policy.
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