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What is Accident Insurance? Everything you need to know

The only thing that is certain about life is uncertainty. However, you can safeguard yourself against all uncertainties with the help of insurance. It would really help if you bought insurance for anything and everything that has an enormous impact but low probability. An accident is one such uncertainty, totally unexpected, and above all; it is unpredictable.

If you had an accident, would you be prepared to pay all the expenses for your recovery? What would you do in this financial mayhem? It would be best if you didn’t get scared; instead, we want you to be aware of the repercussions of an accident. Accidental insurance is the solution to all accident and injury-related problems.

What is an Accident Insurance Policy?

In times when your finances are in a strain due to an injury caused by any accident, accidental insurance provides complete financial protection. In an accident, there could be medical bills and expenses that you did not anticipate like co-pays, high deductibles and other out of pocket expenses. Accidental insurance pays you out of the lump-sum amount to overcome the loss caused due to the accident. It depends on the policy contract, how it defines an accident and what it shall cover at the time of the accident. It generally covers expenses ranging from initial doctor’s visit to post-surgery expenses.

Types of Accident Insurance Policies

There are two types of accidental insurance policies.

Individual accidental insurance – this type of accidental insurance policy protects just the individual. It covers loss of limbs or sight, temporary or permanent disabilities, and even the case of accidental death caused due to the accident. These types of accidental insurance policies are best suited to an individual having a job profile which includes travelling and also for businessman running large enterprises. Sometimes, in the case of death of the head of the family, it sustains the financial stability for the family.

Group accident insurance – it is generally offered by the employers to get their employees covered against unforeseen exigencies. Employers obtain group policies at a discounted rate. As its obtaining cost is meagre, so are its benefits and features. Group Accident Policies are best suited for small enterprises, corporate or clubs as their needs are low.

Features of an accident insurance policy

Some of the salient features of the Accidental insurance policy are-

Coverage – An Accidental Insurance Policy covers all kinds of injuries that affect your lifestyle. This includes accidental death, permanent disability and temporary total disability. Thus, the accidental insurance policy covers all accident-related contingencies.

Financial Assistance – An Accidental Insurance Policy provides you with a -sum amount to ease your difficulties at times of accidents. Claim amounts may vary based on the injury, but at the time of death, full claim amount which is equal to the sum assured is paid as compensation. It saves all your hospitalization and medical expenses; which can be a big relief to you.

Education grant – In case of death or permanent total disability, accidental insurance policy takes care of your children’s education needs. Your children’s education and future are secured by the compensation of the sum assured. Education coverage is up to a specific limit only.

Premium and Claim – Premium amount depends on the type of accidental insurance policy. Premium group policy is relatively low as compared to an individual policy, as group insurance is obtained at a discounted rate. Claim amount is given by considering the nature of the injury but compensated entirely in case of death or permanent disability.

Suitability – This kind of accidental insurance is most suitable for those who have exposure to accidents like workers in hazardous industries, salesmen who have travelling job profiles or businessmen running huge enterprises.

Advantages of Accident Insurance Policies

Financial security – A significant advantage of an accidental insurance policy is that it provides you with financial security and peace of mind. It helps you protect the money you’ve earned from large unexpected outflows on account of accidents. It provides you with an education grant along with cash benefits. Thus it makes less painful financially when you or one of your loved ones suffers from an injury.

Worldwide coverage – Accidental insurance policy has both national and international scope. Like the other kinds of insurances, the geographical location of the accident doesn’t matter in an accidental insurance policy. It provides you with extensive benefits without any geographical barrier.

Fewer complexities – Accidental insurance policy doesn’t require the stressful task of documentation but just basic minimum details in the application form. It also doesn’t require any prior medical tests for premium and claims determination. Also claim process under the accidental insurance policy is a straightforward and simple task of filing your application with the insurance company. The company verifies the claim, and finally, you receive the compensation.

Complementary with health insurance – Health insurance is just confined to hospitalization and medical expenses, but accidental insurance policy also covers after hospitalization expenses; with full compensation in case of death. This largely secures the future of your family.

Expense reduction – An Accidental insurance policy buffers your overall costs by covering costs including emergency rooms, doctor’s visit, X-ray, hospital admission and stay, surgeries, and ambulance cost. Thus, the accidental insurance policy pays benefits over and above what your regular health insurance pays.

Coverage of an Accident Insurance Policy

The Accidental insurance policy covers the following injuries –

Accidental death – in the unfortunate event of death, due to an accident your family will get 100% compensation of the total sum assured

Permanent total disability – an Accident that causes Disability denying you of your income for more than one year is termed as Permanent Total Disability. In such an instance, you can claim the total sum assured as compensation.

Permanent partial disability – it includes impairment like loss of speech, eyesight or any such physical faculties. You can get cover up to 100% depending on the extent of injury or disability.

Temporary total disability – covers disability when the injury sustained makes you devoid of doing your work and earning income for a while. You can get weekly benefits for accidents. You can get the option of customization of the cover but to avail that option, you have to make some disclosures at the time of buying the policy.

Inclusions in accident insurance

  • Road, rail, and air accidents
  • Burn or poison-related accidents
  • Cylinder blast
  • Snakebite or venomous bite
  • Loss of organ
  • Loss of eyesight
  • Dog bite

Exclusions in accident insurance

  • Suicide attempt
  • Death caused due to HIV/AIDS
  • Sports-related injuries
  • Childbirth or pregnancy
  • Accidents related to smoking, tobacco, alcohol or drugs
  • Insanity
  • Civil war or unrest

Why Accident Insurance Policy?

In this uncertain world, accident insurance is a must for people who are vulnerable to accidents. This acts as a safety net during accident-related contingencies due to following reasons.

Low premiums – premiums are relatively low as compared to the coverage and sum assured by the company. Premiums are also low in group accident insurance as they are obtained at a discounted rate.

Tax benefits – premiums on accident insurance are tax-deductible. You can even enjoy tax benefits under the policy under section 80D of the income tax act 1961. You can claim deduction up to Rs.25,000 if you are below 60 years of age and a deduction of up to Rs.50,000 if you are above 60 years of age.

Add-ons are also provided under the policy like educational grants for children, funeral expenses, hospitalization expenses and medical expenses, cover on burns and fractures, and unemployment compensation.

What is Accidental Insurance

Why is there an increase in hospitalization expenses during COVID 19?

After the IRDAI order, all hospitals have to include all the COVID-19 related hospitalization facilities. Hospitals are now charging high costs, though the insurance company has to pay it partly. Different hospitals are charging different rates for the same treatment. Thus they are defying the uniformity in cost structure, eventually increasing the burden on both the insurer and insured. This ultimately gets reflected in the premium amount.

Who should buy a personal accident policy?

Nature and specifications of the risk are not known in advance. You don’t have control over any unfortunate events like accidents. Anyone can avail benefits of accident policy from 18 to 65 years of age. People with a traveling job profile or businessman running large enterprises have more exposure to uncertainty. In an attempt to safeguard the financial budget and future of the family, anyone can buy personal accident insurance, depending on the risk appetite of the person covered.

How can I calculate my health insurance premium using an online calculator?

In this technology-driven world, everything is available at your convenience. With the facility of internet access, you can access any comparative website and calculate your insurance premium online. It just requires a few necessary details like date of birth, past medical history, contact details, family details, details of the person insured etc. You are also asked for the sum assured. According to the information provided and the preferences outlined, the online calculator skims through all the policies and calculates the estimated premium. It also provides you with free quotes from different insurance companies. That makes your task all that easier.

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