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Personal Accident Insurance: Why You Need It
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About three years back, while running up and down the stairs of my building – I was training for the annual Mumbai Marathon – I suddenly missed my footing, tried to regain my balance and in doing so fell down, twisting my ankle in the process. I picked myself up immediately and attempted to walk and felt a sharp pain on the side of my foot. I thought if I ignored it, the pain would go away – but it only worsened and within an hour, my foot was swollen and throbbing. I could hardly keep my feet down.
A visit to the hospital and an x-ray confirmed the worst – a fracture of the fifth metatarsal – the bone that connected the small toe to my heel had broken. The doctor said that it would take about six weeks for the fracture to heal and in the meanwhile, I would have to be on crutches. My foot was bandaged up and I was given some medications, including calcium tablets, to speed up the process of healing.
Of course, I had to perforce, stay at home at least for three weeks. Not having much to do I realised that I had a personal accident policy and wondered if I could do something with it. On contacting my insurance company, imagine my surprise when I was told that I could claim all my medical expenses (visit to the hospital, medicines etc) and on top of that for every week that I stayed at home I would also be paid Rs 5000 each.
Getting paid to stay at home! I was glad I had the foresight to take personal accident insurance.
Mine were only minor injuries and I was working and I had anyway a lot of sick leave to cover my absence, so I would not really have been affected monetarily in any case.
There are people who suffer more serious injuries, are laid up for months in hospitals, sometimes they even get disabled and are unable to go to work and their employers do not pay them for that absence. What happens in such cases?
Let me relate another incident. In 2006, Mumbai was rocked by a series of bomb blasts on its local trains. About a 100 people died in the blasts and several more were injured. Among those injured was a young bank executive, who was not even on the train. He was standing on the platform when a metal door from the train, torn from its hinges hurtled through the air and collided with him.
He suffered some head injuries, lost hearing in one ear, one eye was partially blinded while one arm was paralysed. He was in and out of hospitals for more than a year while he was laid up in hospital for more than three months, getting treatment and unable to attend work.
Fortunately for him, he had personal accident cover and a substantial portion of his hospitalisation expenses was reimbursed.
The purpose of these two examples is to show you that taking a cover for personal accidents is as important as taking a life insurance policy or a health cover.
Unfortunately, personal accident is one of the least known insurance covers in India and inexplicably, insurance companies do not even advertise or promote it. Premium rates for such covers are abysmally low – for instance, you can get a Rs 10 lakh cover at a premium of roughly Rs 700.
While what happened to the bank executive was a freak incident, India has the dubious distinction of having the highest number of road accidents in the world. Apart from this there are numerous other ways that people are injured – bridges caving in, roofs and trees falling, getting run over by trains and so on.
A woman I know very well, who runs a beauty parlour, was assaulted – for no reason whatsoever – by drunken man in broad daylight in a busy street. Her ribs were broken while both her legs suffered fractures. She was in hospital for over a year and even now, she is not fully recovered and walks with a limp. Imagine the costs of being in hospital, the medications, operations (if any) she must have had to spend on.
If you have personal accident cover, then in the event of an accident, the insurance company will pay you a fixed compensation and this covers death (due to the accident), permanent total or partial disablement and temporary total disablement.
In the case of death, the compensation will be to the extent of 100 percent of the sum insured. The compensation depends on the severity of the injuries and the extent of disablement. In the case of temporary total disablement (where the injuries are only for certain period) then the insurance company usually pays 1 percent of the sum insured every week (subject to a ceiling of Rs 5000), up to a maximum of 104 weeks.
In some cases, even your medical expenses are reimbursed and for this it is not necessary for you to be hospitalised – you can convalesce at home. This amount is a certain percentage of the sum insured.
The accidents, which usually fall under the cover, are – rail/road/air accidents; injury due to any violent collision or fall; injury due to fire, explosion, acts of God; snakebite; frostbite, burns, drowning and poisoning (accidental poisoning).
The amount of cover that you can take is linked to your earnings. The premium payable depends on the type of work you do and what kind of industry you are engaged in. Those with normal office jobs are categorised as normal risk; people working in construction sites, drivers, machine operators etc. are categorised under medium risk while those in hazardous occupation come under heavy risk.
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