Why you need an insurance against accidents and how to buy one
05 May, 2014 01:01 PM
You have a large life insurance cover with a term plan to safeguard your family's financial future. You also have a comprehensive health insurance plan to pay your hospital bills. Your car is insured against damage and theft, while your house is covered against natural and man-made calamities and burglary. Are you missing something? It is quite likely that you don't have personal accident insurance. In 2013-14, barely 55 lakh individuals bought personal accident insurance. That's less than 0.5% of the total population of the country and about 5% of the estimated insurable population.

There are two important reasons why a person should buy personal accident insurance. First, India is the accident capital of the world, with a person dying every 90 seconds. According to the National Crime Records Bureau, 3.94 lakh Indians died in accidents in 2012. While more than 35% of these deaths were due to road accidents, people also expired due to train accidents (7.4%), drowning (7%), fire (5.9%), falls (3.1%) and electrocution (2.2%).

The second reason for taking this cover, of course, is that personal accident insurance is unique and provides a cover that no other policy does. A life insurance policy will give a lump sum to the nominee if the policyholder dies and a medical insurance policy will pay the hospital bills if he is injured. But what if a mishap leads to a disability and impairs the individual's earning capacity?

The number of people injured in road accidents is nearly four times higher than the number of deaths. In 2010, nearly 1.3 lakh people were killed in road accidents in India. However, over 5 lakh were either seriously injured or permanently disabled. Whether the disability is total or partial, temporary (3-4 months) or permanent, the personal accident policy will come in handy. If the policyholder has opted for the benefit, the plan will also pay the medical expenses incurred due to the accident.

Most accident victims are young. In 2012, nearly 60% of the accidental deaths involved people aged between 15 and 44 years. "A young person is more likely to have an accident and injuries than die of an illness," says Tapan Singhel, CEO and managing director of Bajaj Allianz General Insurance. Yet, a personal accident and disability cover is often missing in the portfolio of the average insurance buyer.

This is surprising because a personal accident cover is not only useful but also very cheap. A cover of Rs 10 lakh costs just about Rs 500 a year. Yet, there are few takers for this essential cover. For every five inquiries that insurance portal Policybazaar.com receives for term insurance plans, there is just one person asking about personal accident cover. "There is very little awareness about personal accident insurance," says Yashish Dahiya, CEO, Policybazaar.com.

What it covers

Accident insurance covers not just road mishaps. It can be any accident—slipping on the stairs, falling from a height, breaking an ankle during a football match, receiving burns while bursting firecrackers on Diwali, or getting electrocuted by a faulty appliance. A comprehensive plan covers the policyholder against all such perils. The basic policy will cover him only for death, paying his family a lump sum in case of an eventuality. As we mentioned earlier, the cost of this base cover is extremely low at Rs 500 a year for a sum assured of Rs 10 lakh.
Source : The Economic Times

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