Personal Accidental Plan

The rising cost of medical treatment and ever-increasing traffic on roads and in trains have spiked cases of accidental death in India. Also, employees of most industrial units are exposed to a high risk of accidents at all times.

This has created an immediate need for PERSONAL ACCIDENT PLANS that cover their policyholders not only for accidental deaths but also for disability caused due to an accident injury.

 

 

WHAT IS A PERSONAL ACCIDENT PLAN?

A PERSONAL ACCIDENT PLAN is an insurance product that provides financial protection to its policyholders if they happen to meet with an accident.

In case, in the mishap, if the policyholder dies then the nominee in the policy is entitled to receive compensation to the extent of insurance cover availed by the policyholder.

However, an accident may not always result in death but may leave the policyholder disabled, partially or fully.

The policyholder, in such cases, can still benefit from his PERSONAL ACCIDENT PLAN and claim compensation for his inability to work and loss of income.

 

 

WHAT KIND OF EXPENSES DOES A PERSONAL ACCIDENT PLAN COVER?

The following is the list of some of the most common expenses that PERSONAL ACCIDENT PLANS cover.

1. Accidental death – If the policyholder dies in an accident then his nominee is entitled to receive compensation to the extent of total insurance cover the policyholder has availed.

 

2. Partial or total permanent disability – Sometimes, an accident may not lead to a death however it may leave the policyholder disabled, partially or fully.

The policyholder in such cases can still benefit from his PERSONAL ACCIDENT PLAN and claim compensation for his inability to work and loss of income.

Disability can be defined as a condition that limits or restricts the individual’s ability to work. Disability can be in the form of loss of hearing, loss of limbs (hands or legs), loss of vision or memory loss.

If an individual is unable to hear from 1 ear, lose vision from 1 eye, lose 1 hand or leg, etc. then it is termed as permanent partial disability otherwise it will be treated as permanent total disability.

 

3. Daily cash benefit – Daily cash benefit in nothing but the per day bed or room charges that hospitals charge to their patients over and above the hospitalization expenses.

Most of the PERSONAL ACCIDENT PLANS provides a fixed amount daily for the number of days a policyholder stays in the hospital.

 

4. Hospitalization expenses – It refers to room charges, cost of surgery, intensive care unit charges, doctor's fee, anesthesia, blood, oxygen, operation theater charges, etc.

This is only paid when you are admitted to a hospital for in-patient care, for a minimum period of 24 consecutive hours.

 

5. Funeral Expenses – In case, the policyholder dies due to an accident, then such plans also cover their funeral charges up to a particular limit.

 

6. Cost of prosthetics – “Prosthetics” refers to the artificial body part which replaces the missing body part of the person.

In case, the policyholder meets with a severe accident where his limbs have to be amputated, then the cost of replacing his body part using prosthetics is also covered under PERSONAL ACCIDENT PLANS.

 

 

WHO MUST HAVE A PERSONAL ACCIDENT PLAN?

The following is the list of some of the professionals, who are exposed to a higher risk of accidents at all times due to the nature of their work. Such professionals are highly advisable to have a PERSONAL ACCIDENT PLAN under any circumstances.

1. Automobile engineers and mechanics– Mechanics and engineers working in automobile workshops are required to work around heavy machineries and equipments.

A small mistake while handling any of the heavy equipments due to inadequate training can lead to a fatal accident and result in loss of life.

 

2. Journalists – News reporters from print and electronic media are required to be on the field most of the time to cover important stories and events that help their respective publications and channels to earn TRP and make revenue.

Often, they are required to visit sensitive areas and dangerous sites to cover certain life-threatening events like public outrage, communal riots, terrorist activity, etc. thus exposing them to risks involved in such events.

 

3. Drivers – Cab aggregating services like Ola and Uber are gaining a lot of popularity and dominating streets these days especially, in metro cities that are known for a heavy crowd and poor traffic rules.

The nature of their work is such that they have to be behind the wheel all the time and some even work overtime to make some extra bucks.

Moreover, some of them also drive rashly which keeps them exposed to a high risk of accidents.

 

4. Pilots and aircraft engineers – Pilots are highly vulnerable to accidents as they fly at a very high altitude. In case of malfunctioning of an aircraft, their chances of survival are subject to many conditions and challenges.

Likewise, flight engineers have the responsibility of maintaining the aircraft and ensuring that the engines are well maintained and free from any technical snags.

For this, they need to conduct regular testing of propellers and other critical parts of the aircraft. Any mishap while conducting such tests can cause heavy destruction hence, it needs to be done very carefully and responsibly.

 

5. Marketing and sales professionals – The field of marketing and sales involves a lot of traveling by various modes of transport including air, roads, railways and water.

Hence, extensive dependency on public transport leaves such professional’s safety and well being at the mercy of public transport drivers and their expertise.

 

6. Industrial workers – Industrial workers involved in handling harmful chemicals and machinery are also highly vulnerable to mishaps if handled inappropriately.

 

 

IMPORTANT POINTS TO NOTE ABOUT THE PERSONAL ACCIDENT PLAN

The following are some of the important features of the PERSONAL ACCIDENT PLAN that all subscribers are expected to know.

1. Age criteria – Most insurance companies offer personal accident plans at an entry age of 5 years to a maximum of 65 years.

 

2. Grace period for premium payments – In case of delay in renewing the policy, every insurance company usually allows a grace period of 30 days in case of yearly premium payment mode and 15 days in case of other payment modes.

 

3. Freelook period – Free look period simply means that the policyholder has all the liberty and rights to refer the original policy document and cancel the policy without any cancellation charges during that period.

Every policyholder is allowed a free look period of 14 days from the date of receipt of the original policy document to review the terms and conditions of the policy and to cancel the policy if it deviates from what was committed.

 

4. Exclusions – It refers to the set of accidental injuries or treatments that the insurance company does not cover and are excluded from the scope of insurance coverage.

Some of the most common exclusions in PERSONAL ACCIDENT PLAN may include adventure sports leading to accidental injury or death, pre-existing injuries, etc. Individuals must go through the list of exclusions before buying the insurance policy.

 

5. Worldwide coverage – Personal accident plans offers international coverage and covers policyholder even outside India.

 

6. No medical test required – Since personal accident plans are the pure accidental plan and do not offer any health-related benefits, the pre-medical check-up is not required.

 

7. Low premium – Since the scope of coverage under personal accident plans is limited to accidental injuries and accidental death only, its premium is comparatively lesser than most insurance plans and policyholders can buy huge coverage at a very nominal cost.

 

 

WHY YOU MUST HAVE A PERSONAL ACCIDENT PLAN?

Every individual must have a PERSONAL ACCIDENT PLAN for the following reasons.

1. Provides financial security to the family – The primary objective of the insurance policy is to provide financial security to the policyholder and his family.

In case of sudden demise of a policyholder, his family will not have to worry about their financial security as the insurance claim amount can take care of all their living expenses.

Most importantly, someone having a home loan but not a life insurance policy is unknowingly putting his family at great risk in case something happens to him before repaying the loan.

 

2. Substantial coverage at a low premium – The premiums for PERSONAL ACCIDENT PLANS are much lower than most of the insurance products available in the market where an individual can buy a huge cover at a very nominal price.

This is because there is no investment component involved in such policies and the entire premium amount is allocated towards covering the risk.

 

3. Worldwide coverage – Most personal accident plans offer worldwide coverage.

 

4. The easy and simplified claim process – Unlike health insurance and term plans, the underwriting guidelines of these plans are very simple and straight forward.

If a policyholder meets with any kind of accident within the scope of policy framework then he is entitled to receive the compensation. This makes the claim process less time consuming and hassle-free.

 

5. Funeral expenses are also covered – On the demise of the policyholder, the PERSONAL ACCIDENT PLANS also cover their funeral charges up to a particular limit.

 

6. No indemnity clause for life cover – If the policyholder has insurance from more than one company and meets with an accident that results in his death then he is entitled to receive compensation from both insurance companies as the indemnity clause are enforced on other insurance products like health insurance, motor insurance, etc. and not the life cover.

 

 

WHAT TO COMPARE WHILE BUYING A PERSONAL ACCIDENT PLAN?

Every individual, before buying a policy, must compare products across various insurance companies based on the following parameters.

1. Sum insured and premium – Sum insured is the maximum amount a nominee can claim under the insurance contract in the event of injury or the policyholder’s death, whereas the premium is the price he pays to receive insurance benefits.

Individuals must always look for the highest sum insured at the least possible premium.

However, though lower premiums should be preferred, the reason for the lower premium should not be ignored.

 

2. Claim settlement ratio – Claim settlement ratio indicates the percentage of claims that were honored out of all the claims an insurance company has received.

The higher claim settlement ratio depicts that either their policyholders are making genuine claims which are less likely to get rejected or the company is too generous in honoring those claims.

Hence, the insurance company with a higher claim settlement ratio should be preferred.

 

3. Maturity age – Maturity age refers to the maximum age that the policyholder can have the insurance cover for and is one of the important factors that should be looked at and compared before buying insurance products.

ACCIDENTAL INSURANCE is more useful when the policyholder gets old since individuals at that age are more vulnerable to injuries and fractures.

 

4. Solvency ratio – Solvency ratio indicates the financial health of the company. The company with a good solvency ratio is always stronger financially and would be in a much comfortable position to settle claims and not find reasons to reject it.

Hence, one should not ignore this factor while comparing the products. As per IRDA, every life insurance provider must maintain the minimum solvency ratio of 1.5.

 

 

DO NOT OVERLOOK THESE PARAMETERS WHILE PURCHASING A PERSONAL ACCIDENT PLAN

The following are some of the important points that every insurance subscriber must consider while buying a PERSONAL ACCIDENT PLAN.

1. Buy sufficient cover – Under insurance does no good for the self and family than having no insurance at all.

The total death cover should be good enough to replace your net annual income taking into account the inflation and existing liabilities.

While taking the insurance, one cannot afford to miscalculate the amount of insurance required on the event of the policyholder’s death to replace his net annual income as any shortfall may land their family in the compromising situation later.

 

2. Check claim settlement ratio – Claim settlement ratio is the ratio of the number of claims received by the insurance company to the number of claims settled by them. Always choose the company with a higher claim settlement ratio.

 

3. Recheck policy form and plan details – Every policyholder is entitled to receive 14 days free lookup period to go through the original policy documents and verify the details.

The 14 days starts from the day the policy document is received by the policyholder.

The scanned copy of the application form is also enclosed in the policy document and it is the sole responsibility of the policyholder to go through every detail mentioned in the form and ensure it is filled correctly.

Any misreporting of personal or health-related information can lead to a rejection of the claim.

Also, the insured must check the plan details and benefits to ensure that it includes what was promised at the time of signing up. Any error or deviation should be immediately informed to the insurance company.

 

4. Take a quick look at fine prints – It may not be practically possible to read all the terms and conditions or fine prints of the policy however, it is advisable to take some time and quickly read through the highlights of various clauses and check important details of the policy.

 

5. Check to add on covers the policy offers – Insurance policies also have provisions for add on covers like critical illnesses and other benefits that can widen the scope of coverage. Policyholders must check and capitalize on all these benefits as per their requirements based on their lifestyle and the profession they are in.

 

 

REASONS WHY YOUR INSURANCE CLAIMS CAN GET REJECTED

The following are some of the key reasons for rejection of insurance claims.

1. Withholding or falsifying critical information in the application form – Concealing critical information like your medical history, illnesses, existing insurance policies, etc. while filling the application form can prove expensive at the time of filing the claim and may lead to rejection of the same.

A policyholder needs to ensure that every bit of information provided in the application form is correct.

Hence, they should avoid asking any 3^rd party to fill up the application form and fill it up themselves instead.

 

2. Failing to renew the policy on time – Every insurance company will give their policyholders a maximum of 30 days of the grace period if they fail to renew the policy by the due date. If the policyholder still fails to act then the policy will get lapsed and any claim arising after that will be denied.

 

3. Concealing medical history – The medical history of the policyholder is of utmost importance to every insurance company as that could form the basis of their future claims.

Hence, anyone withholding such details, intentionally or unintentionally will be construed as a breach of the insurance contract and can lead to rejection of all future claims.

 

5. The type of injury was excluded from the scope of coverage – The insurance contract mentions a list of certain exclusions. If the claim is filed for any of the events mentioned in the list of exclusions, then the same will not be honored by the insurance company.

 

6. Failing to follow traffic rules – If the accident occurs as a result of breaking certain traffic rules like jumping the signal or driving without having a valid driving license can form the basis of rejection of your insurance claim.

In one of the cases, the pedestrian while crossing the road was knocked down by the vehicle and his insurance claim was rejected for not using the zebra crossing.

 

7. Providing insufficient nominee details – Nominee is the beneficiary in the insurance contract and is the authority for collecting the insurance claim proceeds in the event of the policyholder’s death.

If their complete details like the name, date of birth, the relationship as per the government-issued document like the pan or adhaar card or passport are not updated, the claim will not be rejected though however, the process is most likely to get stuck.

 

8. Causing delay in filing the claim – All claims are required to be filed within 7 to 15 days from the day the event has occurred. Any delay will call for unnecessary complications and justifications from the policyholder and there are slight chances that the claim can even get rejected.

 

 

LIST OF THE MOST COMMON EXCLUSIONS UNDER THE PERSONAL ACCIDENT PLAN

The following is the list of some of the most common exclusions under the PERSONAL ACCIDENT PLAN.

1. Natural death – A PERSONAL ACCIDENT PLAN does not provide any compensation in case of natural death or if the death is caused due to an illness or any reason other than the accident.

 

2. Pre-existing disability or injury – If the policyholder dies while taking a treatment for any of the injuries or an accident that was pre-existing at the time of taking the policy is not covered.

 

3. Suicide or self-injuries – Any injury or death caused while attempting to commit suicide or performing stunts is not covered.

 

4. Influence of alcohol or drugs – Any accidental injury caused to the policyholder under the influence of intoxicants like drugs, alcohol, etc. is not covered. However, the claim will be denied only if that state is proved to be the primary reason for the accident.

E.g. If a policyholder is driving the car under the influence of alcohol and meets with an accident then he is not covered, however, if he is traveling by taxi and meets with an accident and the taxi driver is not under the influence of an alcohol then he will be covered.

 

5. Committing a criminal act or being involved in anti-social activities – If any anti-social elements like gangsters, terrorists etc. dies while in action then they will be kept outside the scope of policy coverage.

 

6. Damages caused out of an act of irresponsible behaviour – If a policyholder meets with a car accident while driving without holding a valid driver’s license or wearing a seat belt then it is indicated that he is not trained or fit to perform that job. This point will be sufficient for an insurance company to reject the claim.

 

7. Act out of suffering from a mental disorder – Any mentally unfit individual is more vulnerable to self-injuries hence such individuals are kept outside the purview of personal accident plans.

 

8. Pregnancy or childbirth – Any injuries resulting while giving birth to a child will not be covered.

 

9. Participating in adventurous or sports activities – Any injury or death caused while performing stunts or while participating in adventurous sports cannot be treated as an accident as individuals willfully indulge in such acts. Hence, these events are also excluded from the scope of the personal accident plan.