Thursday, December 24, 2009

Personal Accident Insurance

What is Personal Accident Insurance?
Personal Accident Insurance protects the insured against accidental death and any form of disablement.

Why should one opt for Personal Accident Insurance?
Take any statistic on accidents (motor vehicle related or otherwise) in the country. With every passing year, all indicators are alarming and consistently in the red. Personal Accident Insurance provides adequate cover against any such accident.

One may argue that he/ she has sufficient insurance cover already. But keep in mind that life insurance covers only risk associated with death. If the insured dies, his/ her dependents will be provided with the sum assured (sum assured from both life insurance as well as personal accident insurance). But what if an accident leaves someone disabled, either partially or totally? Personal Accident Insurance becomes even more relevant in such a situation - it covers the risk associated with partial and total disablement in case of an accident.

What about the costs?
The premiums associated with Personal Accident Insurance is very low, usually even lower than that for pure term insurance. For e.g: Safe Guard, a policy promoted jointly by Axis Bank and Bajaj Alliance  offers accident insurance coverage of Rs.10 lakhs at an annual premium of Rs.990.

To put this in perspective, for a coverage of 10 lakhs, the corresponding premiums for other major insurance covers are given below:
  • Term Insurance (for 35 year old male) - Rs.4330
  • Motor Insurance (for 2008 model Honda Civic) - Rs.18,800
  • Personal Accident Insurance - Rs.990 

To conclude, Personal Accident Insurance is a must have in anyone's insurance portfolio. It should not be considered as a substitute for basic life insurance, but it need to augment one's overall insurance requirement. For the applicable premium and the associated benefits, Personal Accident Insurance is well worth the money and is definitely a value buy!

NB: Personal Accident Insurance does not come under tax exemption categories.

Disclaimer: The views posted in this blog are my own and are based purely on my own way of assessments. Readers are  requested to consult with their financial/ insurance advisers before making any investment/ insurance decision, do their own due diligence and validate factual information. 

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