What is Personal Accident Insurance

What is Personal Accident Insurance

Farhad was driving back to his office after meeting a client. As the traffic signal turned green, he turned towards his office building. Suddenly, there was a loud bang. A speeding bus had rammed into his car. Farhad was trapped inside. Onlookers rushed Farhad to the hospital. There, the doctors informed him that his fractures required him bed rest till it heals completely. That meant at least a month off from work. The person on the bed next to him, confused by Farhad’s calm reactions, asked why is he not worried? Farhad told him that though the injuries are painful, that is all he has to worry about because he has a good personal accident insurance. The other man, interested now asked how it works. “Personal accident insurance is a policy that can reimburse your medical costs, provide compensation in case of disability or death caused by accidents. There are other benefits too that you can get with an IPA insurance” said Farhad, continueing with the following:

1. Accidental death: If the policyholder dies in an accident then his nominee gets accidental death compensation. The family is financially secure in this situation. The compensation can vary from Rs 5 lakh to Rs 1 crore.

2. Permanent total disability in an accident: At times, despite medical help the victim becomes disabled for life. Then the insurance policy pays a certain amount depending upon the nature of the disability. The policy also covers loss of speech, loss of vision in both eyes, and hearing loss in both ears.

3. Permanent partial disability: This is applicable if a person has partially lost their hearing in one ear or suffered eyesight loss in one eye. Or, it could be that the policyholder has lost an index finger, a thumb, or even a hand. In all these cases, the policyholder can approach the insurer for a claim.

4. Transportation benefit: Some insurers also grant a family transportation benefit. Say, the insured person is in a hospital outside 150 km of his home. The immediate family member will incur certain transportation expenses to reach the hospital. The insurance will reimburse these expenses up to a maximum of Rs 50,000.

5. Further benefits: The insurance covers other factors like education and employment benefits, and funeral expenses. You also get coverage for hospital charges, including ambulance costs. Some policies offer an educational allowance and home or vehicle alteration benefits.

Before buying your policy, you must keep these things in mind

Important dates: An accident insurance policy provides a free-look period of 15 days. This allows you to cancel the policy within that period. There is a ‘grace period’ of 30 days for policy renewal.

Exclusions: Your insurer will not cover any loss arising out of acts of war or terror. It will not cover any claims regarding existing physical disabilities or pre-existing diseases. The exclusions also comprise mental disorders, HIV or AIDS, and congenital anomalies. The insurer will not honour any intentional injury claims. Any injuries arising from participation in adventure sports come under exclusions as well. This includes activities like bungee jumping, mountaineering, and river rafting.

15 Terms You Must Know Before Buying Health Insurance

To find the best insurance policy, you need to understand what it says. One new term and your interest as well as understanding of the policy goes out of the window. So, we are compiling a list of 15 such terms that you must know before buying your next health insurance

1. Cashless Claim
As the term suggests, the insured can make a claim without paying any cash for the medical assistance at the specified network hospitals.

2. Coverage Amount/Sum Assured/Sum Insured
It is the maximum amount payable in the event of a claim. The premium of the health insurance policy is dependent on the coverage amount chosen by you.

3. Critical Illness Policy
A policy for a serious, possibly terminal disease, which is strictly defined by the insurer. Most critical illness policies provide for the payment of a lump sum benefit if the policyholder is diagnosed as suffering from any one of the specified conditions.

4. Cumulative Bonus

Cumulative bonus is similar to no claim discounts, the only difference being that instead of giving an upfront discount, the health insurance company adds more benefits for the same premium paid.

5. Disability Insurance
It is a form of insurance that pays a monthly income to the insured when he suffers from total or partial disability caused due to either illness or injury, that affects his capacity to work and earn.  

6. Deductible 
It is the amount of loss borne by the insured after which the insurance kicks in. This share of expense can be a certain money amount or a percentage of the claim amount. However, bigger the deductible, lower is the premium.

7. Exclusions
The diseases, conditions or situations in which medical expenses are not covered by the health insurance policy. Exclusions can be of two types – ‘Permanent’, i.e. the ones never covered and ‘First year’, which are ailments covered from second year.

8. Floater Policy
A policy that is issued with a single sum insured covering number of individuals. The cover can be used by any member of the family any number of times.

9. Sublimit
It is the limitation in an insurance policy on the amount of coverage available to cover a specific type of expenditure. It can be in amount or percentage.

10. Loading

It is the amount a health insurance company adds to you renewal premium if you had made any claims in the previous year.

11. No Claim Bonus
It is a bonus or rather a discount on the Basic Premium if there is a claim-free year in the policy. This bonus gets accumulated with each year you don’t make a claim.

12. Overseas Mediclaim Policy (OMP)
An Overseas Mediclaim Policy is issued to persons who are undertaking trips abroad for business, pleasure or educational purposes.

13. Personal Accident Policy
They are issued as fixed benefit policies whereby specified sums are paid on the occurrence of specified events such as death or disability.

14. Pre-existing Disease
It is any ailment or disease that a person is already suffering from, at the time of purchasing health insurance.

15. Third Party Administrator (TPA)
The authorized claim settling agents of the Insurer who ensure that the policy terms and conditions are complied to.