January 30 , 2013
Life insurance policy pays a lump sum amount on death and mediclaim policy reimburses hospitalization expenses. Neither of these can bring solace if an accident leaves one disabled and unable to earn. A disability, whether total or partial, can leave you without income for long periods.
This risk must be covered through a personal accident policy. Unlike life insurance every earning person should have this policy irrespective of whether they have dependents or not since they themselves might survive to need the policy benefits.
Personal accident policies are term policies that pay a lump sum amount on death by accident or on disability caused by an accident. Generally they are one-year term policies and have to be renewed every year. The primary purpose of personal accident policies is not accident death cover but most insurers offer it as part of the package. Not bad. Premium of personal accident policies works out to about 1/500th of the sum insured.
Insurance companies allow the entire family to be covered under a single policy, that too with discounts. Does this make sense for you? You cannot go wrong on this if you are clear about what personal accident policy is meant to cover. As long as your spouse or other dependents don't have an income to lose they don't require a personal accident policy. You would be paying extra premium to cover a risk that does not exist. Insurance should not be viewed as an opportunity to make financial gain out of a tragedy. But if your personal accident policy also pays for hospitalization you can consider covering your family under a single policy.
Personal accident policies usually pay 100% sum insured in case of death or permanent total disablement by accident. They have sub-limits for other losses such as permanent partial disablement, temporary partial disablement, burns, hospitalization etc. Read through the article 'All You Want to Know before You Buy a Personal Accident Policy' mapped under Concepts section of this page for details of this type of insurance.