A Personal Accident Insurance is an insurance which covers a person from accidental death and disablement. The disablements include permanent total disablement, permanent partial disablement and temporary total disablement.
A full fledged Personal Accident Insurance policies offer comprehensive cover, which is better than the accidental riders usually available with other forms of insurance. In the case of personal accident covers in the form of riders, the coverage amount is restricted to a proportion of your base cover. This may defeat the purpose of the cover, if death occurs as a result of the accident. Hence it is recommended to opt for a full cover.
We have analysed personal accident insurance products of 10 companies on the basis of several parameters, as under:
Coverage and the Sum Assured: Most companies offer policies which cover accidental death and the above mentioned disablements. The Sum Assured is generally dependent on the type of cover you opt for, i.e.: only Accidental Death, or includes one or more types of disablements. Few companies like Bajaj Allianz and Tata AIG take the occupation, age and income into consideration while determining the Sum Assured amount. If you are a NRI and wish to take a personal accident insurance policy, it is recommended to check on the specific coverage and any other additional conditions with the insurer before taking the policy. Some insurers do not offer a personal accident insurance product to NRIs, while some impose certain conditions on claim settlement. ICICI Lombard has a special personal accident insurance product for NRIs - 'NRI Personal Protect'. It is always better to disclose this fact at the initial stage itself and understand all the underlying conditions.
Premium: One unique factor about premium calculations under Personal Accident Insurance is that it primarily depends on your occupation and location, and not on age, unlike other insurance policies. This is because your nature of occupation determines the extent of risk you are exposed to. The premium to be paid for such policies is much cheaper than a term policy or health policy. It usually ranges between Rs. 750 and Rs. 1500, depending on the company and additional covers you opt for. Future Generali offers the least premium, while HDFC ERGO and Tata AIG charge higher premium among the players we have compared.
Family Cover: All companies offer coverage for the individual and an optional cover for his spouse. Children are also usually covered in the policy of the parents, although the entry age for children varies from one policy to another. While most companies offer a discount of 10% in premium rates if you take a family cover, Starhealth offers a lower discount of 5%. HDFC ERGO and ICICI do not offer any discount on family packages.
Death Cover: In case of death due to accident, companies pay 100% of the Sum Assured to the nominee of the insured person.
Permanent Total Disablement: This refers to a permanent total disablement due to accident, which can include loss of 2 limbs (both hands or both feet), one hand and one feet, loss of sight of both eyes or speech or hearing of both ears. Generally companies compensate 100% of the Sum Assured. Some companies offer a higher compensation. For example, Bajaj Allianz gives 125% of the Sum Assured, while Bharti AXA and Star Health offer 150% of SA. There are other companies like Apollo Munich and New India Assurance which compensate 50% or 100% of the Sum Assured, depending on the nature of the disablement.
Permanent Partial Disablement: This also refers to permanent disablement, but the disablement is only partial and not complete. Instances of this include loss of one finger, loss of arm, loss of leg, one eye or hearing in one ear. Coverage generally starts from 5% of the Sum Assured and goes upto 100% of the Sum Assured in some cases, depending on the disablement.
Temporary Total Disablement: This covers disablement due to an accident, which may be temporary and total in nature, which affects the insured person’s ability to earn income. The temporary disablement usually will need to be certified by a doctor. The compensation given is in terms of a weekly benefit, and this is given for a period of 100 weeks (104 weeks in some cases).
Cumulative Bonus: Similar to health insurance, personal accident insurance policies also offer bonuses on claim free years. For most companies this is 5% per claim free year, subject to a maximum cumulative bonus of 50%. Some companies like Future Generali, Royal Sundaram and Tata AIG have a lower cumulative bonus limit of 25%. HDFC ERGO and ICICI do not offer this bonus. Remember to check the policy document for actual eligibility, as this feature is sometimes not available for death only policies and permanent disablement policies.
Other Benefits: Apart from covering basic benefits of death and disablement, companies offer a variety of other benefits when you take a personal accident insurance. The most common among them is the education fund - the child’s education is sponsored in case of death or permanent disablement of the insured parent. Generally, the limit for this head is Rs. 5000 per child, upto a maximum of 2 children. Some companies also give this as a % of the Sum Assured amount. Note that HDFC ERGO and ICICI do not offer this benefit. The other common benefit offered by most companies is reimbursement of accident medical expenses. This is usually an additional cover, which can be purchased by paying a higher premium. Some companies offer this without charging any additional amount. Other benefits include emergency ambulance benefits, family transportation benefits (expenses of transporting one family member to the hospital where the insured person is admitted), transportation of mortal remains to the residence of the insured person from the accident site, hospital cash allowance if the insured person is admitted in a hospital given on a per day basis. Some companies like Future Generali and Tata AIG also compensate for any modification to be carried out in your vehicle or house as necessitated by a permanent total disablement.
Choice of Policy:
Most companies offer similar features on personal accident policies. This form of insurance is not very customised like a health plan and the features are more or less standard like a term plan. As a result, there is a confusion if one should opt for an Accident Insurance from the same company you took a term cover or health policy. While you should look out for options in the market and choose the policy with the best and most appropriate features, you should also look at logistics in terms of ease of paying premiums and claim settlement.
As far as features are concerned, there are minor differences between the policies. Apollo Munich Personal Accidental Standard is suitable for a pure death cover. Bharti Axa, StarrHealth and Bajaj Allianz Personal Guard give high covers of 150%, 150% and 125% of the Sum Assured amount respectively for Permanent Total Disablement, while most peers offer only 100%. Future Generali Accident Suraksha offers a low cumulative no claim bonus amount but has a low premium and has more add-on benefits compared to peers. HDFC ERGO and ICICI Lombard personal accident policies charge a comparatively higher premium and also offer fewer benefits compared to other players in the market. Similarly, the policy by New India Assurance also offers fewer benefits compared to peers and also has a limit on the coverage for family members. Royal Sundaram personal accident policy also limits the Sum Assured coverage amount for family members and the bonus amount is also limited. StarHealth Accident care policy has all the basic features in place, and provides up to Rs. 50 lakhs each as Sum Assured for Accidental Death, Permanent Disablement and Temporary Total Disablement . Tata AIG gives an even higher Sum Assured upto Rs. 1 crore, but offers a lower cumulative bonus limit. Please refer the comparison below or the excel file for a detailed review of the positive and negative features in each policy.
While a personal accident insurance policy is important for people, especially for those working in high risk jobs, it should not be your priority in terms of buying an insurance cover. It is always recommended to first purchase adequate health insurance and life insurance before opting for a personal accident insurance cover.
If you prefer to download the excel file which has the detailed comparison of the above 10 policies, please click here. For more details, refer to individual company’s prospectus. Kindly note that this analysis covers offerings from major insurers only & this is not an all-product comprehensive comparison. The analysis is valid on the date being published.
Last Updated: June 2016