Accident Insurance

Morbid as it might sound, an accident can leave you temporarily or permanently disabled, and perhaps seriously impair your ability to earn a livelihood. A life insurance policy is of no use in such a situation, since it covers only the risk of death. And, while a health insurance policy may take care of the immediate expenses associated with hospitalization, it provides you no compensation for the loss of livelihood.

In other words, you are probably leaving yourself extremely vulnerable to a fate that is, in some ways, even worse than death. It thus becomes imperative to consider buying personal accident policies and riders.

In insurance speak, personal accident is defined as an unintentional accident due to external, violent and visible means. Personal accident policies cover you for one or more of four contingencies in the event of an accident: death, permanent total disability, permanent partial disability and temporary total disability. In the event of such contingencies, a personal accident policy will provide for payment of a lump sum, either the full sum insured or a percentage of it.

Policies Insurers, public and private, offer four options in personal accident cover. The premiums don't vary with age; they remain the same till age 80, which is the maximum age at which a personal accident policy can be bought.

The premium depends on the sum insured, the extent of cover and your profession. Option 4 provides the most comprehensive personal accident cover. It also provides for a weekly compensation for the period you are unable to return to work following an accident. The amount of weekly compensation depends on the sum assured: it is 1 per cent of the sum assured.

There's an overall cap on the amount of personal accident cover you can take: 60 times your monthly salary. There's also a ceiling of sorts on the cover you can buy under option 4: about 25 times your monthly salary. It follows that if you want more cover, you will have to take it under options 1- 3. Although insurers don't formally specify a limit under these options, they are unlikely to give you cover that is disproportionate to your income/salary.

TIPS

I . An insurer has the discretion to move you to a lower risk group based on the nature of your work. For example, journalists come under the highest risk group, ostensibly because many of them travel, which exposes them to the risk of injury. But there are also journalists with desk jobs, who can negotiate with insurers for being bracketed in a lower risk group, where the premium is lower.

3. If you buy a householders' policy, consider taking accident cover as part of that policy if such bundling entitles you to a 15 - 20 per cent discount on premium payments on specified sections of the householders' policy.

MAKING A CLAIM

In case of a claim, inform your insurer. Besides policy details, you'll have to give a description of the accident, the extent of the injuries sustained by you, relevant medical certificates and your latest salary certificate. In some cases, particularly claims made under option 4, insurers may depute a panel of doctors to verify the claim.