Recently one reader of this blog raised an interesting question. He asked me, what is the necessary when we have health insurance and any hospitalization due to accident also be covered under health insurance? Looks great but in reality health insurance and accidental insurance are two different products meant for different requirement. So let us discuss about this today.
These days there is huge buzz about buying term plans online. At the same time few go ahead and buy health insurance too (even if employer providing them). But there is less knowledge spreading about accidental insurance which is most cheapest than the other two mentioned products.
What is Accidental Insurance Policy?
These policies are like health insurance policies which means it will be yearly contract between you and insurance company. Unlike Term Insurance where insurance companies offer maximum around 20 times of your yearly income, here in accidental insurance it actually depends on company to company and also your profession matter utmost here. If your profession is more prone to accident, then insurance companies may offer less sum insured or may raise premium. Also one more interesting point that differs from life and health insurance is, here your premium is not fixed on your age, but the profession you are into. So these policies will come into picture when you met with any accident. Accident in the sense sudden, unforeseen or unexpected.
Usually your profession is divided to different categories to arrive at premium.
Level 1- Administrative/managing functions, accountants, doctors, lawyers, architects, teachers or software engineers etc.
Level 2-Manual labour, garage mechanic, machine operator, paid drivers, cash carrying employee, builder, contractor, veterinary doctor etc.
Level 3-Workers in underground mines, electric installations with high tension supply, circus performers mountaineers, professional river rafters etc.
So any effect to your body due to accident is covered in such policies. But such accident must not be suicide, self injury or war etc. Below are the benefits covered under accidental health insurance policies.
Death–If death occurs due to accident then full sum assured will be payable to nominee. Do remember that in case of life insurance your nominee will receive equal to sum assured in case of death due to natural or accidental. But in case of accidental insurance your nominee will receive sum assured only in case of accidental death but not normal death.
Along with this sum assured payment, in few policies you will receive children education bonus which is around Rs.5,000 per child (maximum 2 children) or 10% of sum assured whichever is lower.
Permanent Total Disablement-Due accident if insured disabled for life then you will receive equal to sum assured or in few products around 115% to 120% of sum assured. Example of such accidents are like loss of both hands or legs, loss of one hand and one leg, loss of limb (hand/foot) and an eye, loss of sight of both eyes, loss of speech and hearing of both ears etc.
Permanent Partial Disablement-As name itself suggests, if someone met with permanent partial disability but not like permanent disability as said above then insurance companies will pay you some % of sum assured depending on the case. Usually definition of permanent partial disability changes from insurer to insurer. Hence the % of payout will also differ.
Temporary Total Disablement-In some cases you met with accident with minor injuries where your doctor may suggest for few days or week bed rest to recover fully. In such situation insurance companies will usually pay some % of sum assured as benefit. Again this definition changes from company to company.
Other than above said features, you will also find some interesting offers from insurers like family discounts, cumulative bonus for each claim free year, medical expenses or hospital confinement allowance. Few companies offer this policy to non earning persons also.
Tax Benefit of buying Accidental Insurance Policy– There is no tax benefit under current income tax law to claim for deduction. But I have not got a clear ruling whether the claim received from such policies will be exempt from tax like life insurance. Let me find the real rules on the same and will update.
Below I tried to find out and do some comparison of available accidental insurance plans in India. List is not exhaustive and few options I am unable to find. Hence I am sharing with you whatever I found. For detailed features and quotes I suggest you to contact individual insurance company. Below premiums are for Level 1 professionals.