What is Personal Accident Insurance and What Makes it Extremely Useful?

You’ve probably heard of life insurance policies or motor insurance schemes, but a personal accident insurance is rarely ever mentioned in the investment market. That’s because they are available at a lower cost, and agents receive a smaller commission on their sale.

A personal accident insurance is meant to cover the policyholder in the event of an accident. This means that if you’ve been injured, or rendered unable to continue working, the policy will safeguard your family by providing monetary compensation.

Many life and car insurance policies come with attached riders that cover accidents, but these riders don’t provide the same coverage as a standalone personal accident policy. There are, however, certain conditions under which a personal accident insurance policy is not applicable.

Exclusions

You can’t claim accident insurance in the following cases:

  • A deliberate attempt to commit suicide or inflicting harm on yourself, resulting in injury
  • An illness or injury that was present before the policy papers were signed
  • Use of intoxicants leading to an accident resulting in your demise, disability, or injury
  • Any injury or disability caused by an act regarded as an offence against the law

Besides these points, your insurance company may specify clauses under which they’re not obliged to provide compensation for certain types of accidents.

In India, the death rate due to accidents increased by 54.3% from 2003 to 2013! And the increase in the rate of injury due to an accident is even higher. In such a situation, personal accident insurance can be a highly useful investment.

Why Is Personal Accident Insurance Useful?

Safeguards Your Family

The best part about having a personal accident insurance policy is that you can be assured that your family will be taken care of in case you’re unable to work because of an accident. This policy covers your family in case there is a loss of income when the earning member is unable to perform their job.

 

Some companies even provide your family with a monthly payout or a lump sum in case you’re temporarily disabled. At least until you can get back on your feet and continue working.

Repayment of Loans

If you’ve taken multiple loans, you’re probably working to pay them off. But what happens in your absence or in the event that you’re temporarily disabled? The loans will keep compounding and your family will be left with a huge debt to repay.

If you take a personal accident policy, your loved ones will receive funds regularly or in a lump sum, which will enable them to pay off the loans and continue to live in comfort.

Excellent Coverage

Most accident policies don’t specify the magnitude of the accident. So, even falling off your bike and breaking your elbow may be covered. Even small injuries like this can leave you unable to perform your job, and that’s when insurance comes in handy.

 

Not all policies cover these minor mishaps so you need to check yours out thoroughly before deciding to invest.

Relatively Low-Cost

Compared to most other policies like health, life, and motor insurance, personal accident insurance tends to be a lot less expensive. The premiums are lower and the sum insured or provided is a fairly large amount. Some yearly premiums even go as low as INR 300, and provide large sums as compensation at the time of settlement. These sums can be above INR 10 lakhs, depending on the policy you sign up for.

Choose One That Suits You

Before deciding on a policy, you need to take a look at your financial situation and figure out which one you can afford. If you’re receiving a large income, it’s best to go for a scheme with a higher yearly premium. Those policies often provide a larger sum when it’s time to claim the funds.

Plan out your budget, and try investing as early as possible, so that you can secure a bright future for your loved ones

Also, you should assess the level of danger associated with your job. For example, working at a coal mine leaves you exposed to a higher level of risk, and if that’s the case you want a policy that provides solid compensation. So don’t forget to read the terms and conditions carefully before you buy a personal accident insurance policy.

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