While most people have general understanding of Life Insurance
and Health Insurance products, they are generally little informed when it comes
to Personal Accident Insurance. A Life Insurance policy covers the risk of death
and a Health Insurance policy acts as a cushion against financial burden in the
event of hospitalization. Then what is a Personal Accident Insurance
Imagine a situation in which someone
is rendered physically disabled following an accident. A Life Insurance is of use
(to the victim’s dependents) only in the event of death and a Health Insurance plan
would compensate only for the cost of hospitalization. Some Life Insurance policies
offer Personal Accident riders, but these riders are not comprehensive. The consequences
of meeting an accident could be serious, like death or pause in income, which could
last from a few weeks, months to even years. What could help in such situations
is a Personal Accident Insurance Policy.
Accident Insurance is a type of insurance which offers financial compensation in
the event of bodily injuries leading to total/ partial disability or dismemberment
resulting from an accident caused by violent, visible and external means. This policy
compensates the nominees even in case of death of the policyholder. It ensures the
financial stability for an individual and his family if he/she is rendered temporarily
disabled on account of an accident, thus plugging a major gap in one’s insurance
portfolio. Despite commonalities, the Personal Accident Insurance is different from
Life Insurance and Health Insurance. Unlike Life Insurance, Personal Accident Insurance
premiums vary with the policyholder’s occupation rather than age.
A Personal Accident Insurance is important for everyone, but it is more relevant
for salaried individuals living in urban areas. Typically, salaried individual travel
from home-to-office and office-to-home, every day, for months and years. In such
lifestyle, chances of death or getting hospitalized for some illness are lower than
the chances of meeting an accident. Despite all possible precautions accidents do
occur. This may result into disablement or loss of limbs or sometimes even death.
In such situation, an Accidental Insurance policy is as important as a Life Insurance
and Health Insurance.
The best part is that a Personal Accident
Insurance Covers are easy on pocket, so one can afford it without any major drain
on his pocket. The cost of (HDFC ERGO’s) Personal Accident Insurance with a cover
of Rs 15 lakh costs approximately Rs 3,000 per year. And since the premium on Personal
Accident Policy does not depend on age, it would be same whether you are 25-year
old or 50-year old. The premium on Personal Accident Insurance policy depends on
one’s working conditions and nature of his job. And yes, a Personal Accident Insurance
plan can also be extended to include the entire family under a single policy.
Despite lower premium rates, the Personal Accident Insurance penetration
in India is relatively low. The features of Personal Accident overlap with Health
Insurance and Life Insurance. Since most people have one or both these products
on them, people consider the Personal Accident as an additional expense and tend
to avoid that. Another reason for the low penetration of Personal Accident Insurance
is the lack of awareness of the product. People identify the non-Life insurance
predominantly with Health Insurance and, to a certain extent, Motor Insurance . Many
people are not even aware of availability of such product, even if they need it.
Many of those who are aware of the availability of the product feel they do not
need such a product. People generally feel confident about themselves and believe
that an accident would not occur to them. However, the fact is that accidents by
nature are uncertain and unexpected. While they do not occur to everyone, they can
occur to anyone, and to protect the self and family from the untoward consequences
of accidents, a Personal Accident Insurance is a Must.
Chopra - Member of Executive Management & Head - Retail Business, HDFC ERGO
General Insurance Company