Buy Customised Accident Insurance Policy to Maximise Benefits

Nikhil Walavalkar explains how add-on benefits enhance the cover for individuals and take care of various conditions arising out of an accident at minimum cost     Many individuals believe that personal accident insurance policies pay only when the insured person dies in an accident. It is a misconception. Personal accident covers do not restrict themselves to death benefit only. For example, they also compensate for partial total disability that covers many conditions like loss of a toe, where the insured person gets 3% of the sum assured. Then there are plans that pay a fixed amount for the education of children if the insured person dies in an accident. Some policy variants in the market also offer hospital cash benefit — a fixed payout for each day spent in hospital due to an accident. Some policies also pay for house modification required for an individual who met with an accident. The point is, there are many add-on benefits you can sew up with your accident cover. "Add-on benefits offered with plain vanilla accidental death insurance try to enhance the insurance cover for individuals and are aimed to cater to various conditions arising out of an accident at minimum cost," says TA Ramalingam, chief technical officer, Bajaj Allianz General Insurance Company. However, don't get lost among the umpteen number of add-ons that come with personal accident covers. List your needs first and then approach the insurance company for a cover.  "You have to understand your risk profile and accordingly choose the cover. If you are a rig worker, then you are in the high-risk category and that warrants a comprehensive cover," says Gaurang Jhaveri, consultant – insurance, International Money Matters. People in the high-risk category, which includes underground mine workers, oil-rig workers and similar work profiles, are highly exposed to risk of accidents and loss of limbs. Such people must buy exhaustive permanent partial disability cover along with permanent total disability. Individuals belonging to the high-risk category will have to pay more premium compared to the individuals from standard risk category. "Insurance buyers must also consider the aspect of replacement of income," adds Gaurang Jhaveri. For an artisan each of his fingers is very important. Loss of fingers or loss of thumbs can materially impact his earning potential. Some policies pay as high as 20% of the sum assured upon loss of a thumb. Though this may not fully compensate the insurance buyer for his loss of income, it surely reduces the loss. Experts also recommend comprehensive covers for extensive road travelers.  The risk is even more if one rides a twowheeler regularly. Such individuals can also opt for policies that pay for house and car modification expenses, ambulance charges and family transportation charges. A point to note: the more features you buy, the higher the price you pay for your accident cover.  INSURERS HAVE SUB-LIMITS  These are expressed as a percentage of death benefit. For example, family transportation benefit is payable up to 1% of the sum assured or . 1 lakh whichever is lower. While buying these policies you have to look at each benefit and its respective sum assured, and not the sum assured for death benefit.  Since the premium is calculated based on the sum assured upon death, on many occasions, individuals ignore the sub-limits, which may lead to inadequate insurance.  There are instances where an insurer offers some important covers, such as hospital cash benefit along with personal accident insurance, to make the policy appear an enhanced offering compared to other policies in the market. "But many times such attempts end up compromising the benefits available to the policyholders to control the cost. Sometimes the sum assured is reduced and sometimes some key features are totally excluded," says Niraj Jain, CEO and principal officer, www.insurancemall.in, a "compare and buy" insurancebroking portal. For example, one may come across a policy where cash benefit for hospitalisation arising out of accident is capped at . 1,000 per day, which may not be of any help for many insurance buyers. If you need higher hospital cash benefit, it is better to opt for a standalone policy offering the same.  Though the premium may go up, it helps you buy hospitalisation benefit for the sum assured you want and covers hospitalisation arising out of illnesses too, which is not the case with hospital cash benefit under many personal accident insurance policies. You further get tax benefit under Section 80D of the Income Tax Act with a standalone hospital cash benefit policy.  Lastly, do remember that these are essentially low-cost products. You can buy a basic cover of . 10 lakh for a low risk category individual for as low as . 500. Most comprehensive covers with sum assured of . 10 lakh are available at approximately . 1,500. Not many distributors would push these products and it may be a great idea to shop online on insurers' websites.  nikhil.walavalkar@timesgroup.com