The insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) on February 16, 2022 proposed changes to regulations that would enable lifelong renewability of personal accident (PA) policies. This will give much needed relief to senior citizens, who were deprived of accident cover after a certain age.
Personal accident policies including Saral Suraksha Bima, usually discontinue after the age of 65 to 70. Even the Pradhan Mantri Suraksha Bima Yojana, which offers ₹2 lakh in case of accidental death and ₹1 lakh in case of accidental disability, discontinues at 70.
This brings to the question why do we need a separate personal accident cover apart from health or term insurance.
What is personal accident cover?
A personal accident cover gives financial protection to the policy holder and their family members in case of accidents causing injuries or death due to an accident, disability, temporary total disability, among other things.
“A personal accident cover is relevant in two situations. First, if the term cover is insufficient. The personal accident cover is cheaper to buy and does not need medicals so can be bought fast. The second reason is that personal accident includes some covers not available in regular term insurance, for example disability covers and medical expenses,” says Kapil Mehta, managing director, Secure Now Insurance Broker.
In fact, a personal accident insurance cover used to be one of the add-on of medical insurance policies, but now it has emerged as a separate category. Much against the perception, it covers not only medical expenses arising out of accident but also the foregone wages and other expenses, among other costs.
“Earlier it (accident cover) used to be a rider with medical insurance but now it has become a full-fledged policy that not only covers expenses arising out of accident but other expenses also such as loss of job, loss of salary during injury. The policy holders doesn’t get the entire salary but the sum assured which can cover his expenses during hospitalisation. So, in a way it is a complete package covering a range of things apart from medical cost. Not to mention that it also gives a ‘sum assured’ payable to nominee in case of death because of accident,” says Abhishek Misra, chief executive officer and principal officer, Bonanza Insurance.
Premium for personal accident policies is usually low. “The premium in accident covers is quite less — even lower than term insurance simply because the risk of accident in general is very less,” says Misra.
Some personal accident policies not only give cover for lost wages but also for EMIs and fracture. Some policies also cover the risks people are exposed to while participating in adventure sports.
So, it is vital that while selecting an insurer, policyholder stays careful about the specific wordings as well as of exclusions. “In terms of selection of insurer, you must look at the policy wordings, particularly the exclusions. Unlike term plans the contracts are not standardised and there can be variances across insurers. Pick the product and insurer that has the most reasonable exclusions,” adds Mehta.
Although it is a foregone conclusion that the policy is imperative and it is advisable to have a separate cover, but experts advise their clients to take a cover of at least ₹10 lakh.
“Since it is difficult to anticipate the severity of an accident, one should buy at least a ₹10 lakh cover,” says Naval Goel, CEO, PolicyX.com.