Personal Accident Insurance

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Recently a close friend met with an accident on the Pune express highway. A truck lost control while taking a turn and bumped into my friend's car. By God’s grace, nothing serious happenedonly minor injuries.

The hospitalization treatment did not cost much. But it raised a questionin his mind, “If something major would have taken place?What if he got disabled due to the accident?”.

As per the Global Status Report on Road safety - drunk driving, speeding, low quality of helmets, seat belts and child restraints cover used in vehicles are the leading cause of road fatalities. In the year 2013, over 1,37,000 people were killed in road accidents in India. 5million people were seriously injured or disabled in road accidents in India in past decades.

While there isn’t a way to safeguard yourself from these mishaps or unfortunate event, but there is a way to cover your expenses in case you meet with such unwanted condition. Lets us understand Personal Accident Policy basics:

What exactly does Personal Accident Policy mean?

Accident means any sudden, unintended and fortuitous external and visible consequence, which might cause bodily harm or which leads to permanent or total physical disability or death.

A Personal Accident policy protects you and your family members against financial loss in the event of any major accidents or disability at an affordable premium.

There are misconceptions about  personal accidental plans. Many people still assume that, possessing a life insurance policy and a health insurance policy will suffice their needs in case of any unfortunate event.However, there is a huge divergence between a personal accident policy and a life insurance or a health policy.

A life insurance policy will provide you protections in case of death or total dismemberment

A health insurance covers you against hospitalization expenses incase of an accident or illness.

Whereas, a personal accident policy will pay you a fixed compensation in case you sustain injuries in an accident that result in death, permanent total disablement, permanent partial disablement or temporary total disablement.

To expand further, personal accident plans offer these keyfeatures:-

1)   Accidental Death: In the event of an accidental death, 100% of the capital sum insured will be paid as a compensation to the nominee.

2)   Permanent Total Disablement: In case of a permanent disability which is absolute and irrevocable loss of body parts (Loss of both limbs) or paralysis the insured is incapable to work and earn income. The policy paysa compensation ranging from 100% to 200% of thecapital sum insured.

3)   Permanent Partial Disablement: - In the event of an accident, leading to a permanent partial disability where either one limb or organ, body part or both are disabled,Policy gives a compensation.

4)   Temporary Total Disablement: - A temporary total disablement is generally for a short period where an accident has resulted in a fracture of the body part or dislocation which resulted in temporary loss of income. Compensation paid in such cases is limited to the Percentage of capital sum insured for a specific number of weeks.

The following is a specimen table of compensation benefits on the basis of the sum insured of 3lakhs selected for the purpose of illustration:-


Amount of compensation payable


100% of Capital Sum Insured (i.e. Rs. 3Lac)

Loss of two limbs or both eyes or one limb and one eye

100% of Capital Sum Insured (i.e. Rs. 3Lac)

Loss of one limb or one eye

100% of Capital Sum Insured (i.e. Rs. 3Lac)

Loss of one limb or one eye

50% of Capital Sum Insured (i.e. Rs. 1,50,000)

Permanent total disablement other than the above (Eg. Paralysis)

125% of Capital Sum Insued

Permanent partial disablement (e.g. Loss of finger)

Percentage, as defined in the table of the policy may range from 2% to 75%

Temporary Total disablement

Weekly payment of Rs. 1,000/- (i.e. 1% of the capital sum insured) subject to a maximum of 100weeks.

The amount of weekly payment is different from most of the companies.


Not all personal accident policies cover the above disabilities. It depends on the coverage and plan you are preferring for.

Other features which some Personal accident plans offer:-

1.   Expenses incurred for carriage of the dead body of insured from the hospital to his residence are reimbursed subject to the limit specified.

2.   In the event of death or permanent disablement of the insured person, there is a compensation offered to the dependent children, in addition to the capital sum insured. The compensation paid depends on the plan you have chosen

3.   Cumulative bonus is offered where the capital sum insured is increased by 5% every year on claim free renewal subject to a maximum of 50% of the capital sum insured.

4.    Worldwide coverage

How is the premium calculated for personal accident cover?

In health insurance normally premium is calculated on age basis, whereas in a personal accident cover premium is calculated on the working conditions and nature of your job. For Eg:, an office manager is less exposed to risk at the workplace than a civil engineer working at a building site.

It is not practical to determine rates for each profession or business.Hence, they are separated into different risk groups. Let us look at the common practice followed in the industry:

Risk Group 1

Accountants, doctors, attorneys, designers, consulting engineers, teachers, bankers, persons engaged in administrative offices, persons primarily engaged in occupations of similar risks, etc.

Risk Group 2

Builders, contractors and engineers engaged in superintending functions only, veterinary doctors, paid drivers of motor cars and light motor vehicles and persons engaged in occupation of similar hazards and not engaged and not engaged in manual labour, cash carrying employees, garage and motor mechanics, etc.

Risk Group 3

Persons working in underground mines, explosives, jockeys, circus personnel and persons engaged in occupations/ activities of similar hazard, etc.


What is not included in the personal accident insurance policy (Exclusions): 

Accidental policies do not pay compensation in respect of death, injury, disablement of the insured incase of the below situations:

a)  Intentional self-injury, suicide or attempted suicide

b)  Whilst under the influence of intoxicating liquor or drugs

c)  Directly or indirectly caused by venereal diseases or insanity

d)  Aircraft pilots or crews, armed forces personnel and artists engaged in hazardous performances are totally excluded

e)  Any Pre-existing conditions.

f)   Riots and crimes

g)  Childbirth& pregnancy

h)  War and related perils

Important points to remember:

1.  Personal accident policy is a benefit policy which pays out compensation in case of death and disablement

2.  The premium for the personal accident policy is reasonable,but it does notgive any tax benefit on the premium paid.

3.  A personal accident policy is also available as a rider. However, the sum insured is restricted.

4.  You can also get tenure discount if premiums are paid for 2 or 3 years


In order to know more about which is the best personal accident product, you need to buy please send across your details to or login to

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