An accident can occur at any time without any warning, and sometimes it can cause serious harm. Any such untoward incident can have a significant impact on your finances; not only can the treatment be expensive, but if you suffer from any form of disability, it can affect your earning potential. You must think about how to manage, in case of an accident that may lead to disability. Personal accident insurance provides a cover for permanent partial disability, temporary total disability and permanent total disability. If you suffer a grave injury, apart from expenses, there could be a loss of income at least for some time. The insurance will not only pay for expenses incurred in the treatment of injuries sustained but also provide a monthly or a gross payment till the time you aren’t working, which regular Life Insurance will not provide. Even in the event of death, the future of your loved ones will be protected with a Personal Accident insurance. With unpleasant surprises like accidents happening now and then, having insured for the accident is not an option. Even after an accident, one can enjoy financial stability and peace of mind if she/he had taken the Personal Accident insurance.

1. WHY INSURANCE?
BY
- RAVIKEERTHI RAO
Personal Accident Insurance

2. Why Insurance is so Important?
 We all have been advised to buy insurance more than
once – either life insurance , health insurance, etc.
 But, often we shy away from buying insurance, thinking
why do I need to buy a life or health insurance being a
young and healthy person?
 And, some of you might have gone for saving schemes /
investment in Gold, or similar instruments, to cover the
future, by thinking that return on insurance policy is very
low, or little money is left after making other
investments.

3. Why Insurance is so Important?
 Contrary to such thoughts, no matter how healthy we
are or how well we are doing financially or how good
a driver we are, we all need insurance.
 This is simply because insurance acts as a safety net
that financially protects you and your family when you
are down.

4. Why Insurance is so Important?
 By taking the insurance, you are transferring the risk of
a financial loss you might experience due to life’s
uncertainties, to an insurance company , for a small
fee.

5. Different types of life
insurance policies
The 3 most important types of insurances are:
1. Life Insurance:
 Life insurance is probably the easiest-to-understand
form of insurance. It pays out upon death and there by
financially protects your family in case you die early .
 How it works:
 You pay a regular premium to the insurance company for a
specific number of years.
 In return, the insurance company pays a sum assured to your
family if you die (due to natural causes as well as accident
death) during the policy tenure.

6. Different types of life
insurance policies
There are different types of life insurance policies
 Term insurance provides higher coverage for a lower
premium amount as compared to other life insurance
policies. But no money is paid to the policyholder if he
survives the term (Policy Period).
 Meanwhile, for policies like endowment or money back,
the policyholder receives a lump sum after the policy
tenure ends. For such policies, premium amounts are
much much higher for the same coverage, as compared
to term insurance. (Refer the slide No. 25 for more details)

7. Health Insurance
2. Health Insurance:
 In a health insurance policy, the cost of medical
treatment of the insured person(s) is borne by the
insurance company.
 Insurance company pays for all the expenses related to
hospitalization, day care, post, and pre-hospitalization,
etc.
 Most life insurance policies do not cover injuries or
treatments.

8. Personal Accident Insurance
3. Personal Accident Insurance:
 We all are exposed to the risks of accidents in our day
to day lives.
 Despite all possible precautions, accidents do occur
which may result into disablement or loss of body
parts or sometimes even death.
 This policy provides compensation in the event of
insured sustaining injuries, solely and directly from an
accident caused by violent, visible and external means,
resulting into death or disablement , be it temporary
or permanent.
--Contd

9. Personal Accident Insurance
3. Personal Accident Insurance:
 With a personal accident policy, one of the biggest benefits is
that it protects against partial and temporary disabilities.
 Including, compensation for loss of income in case, an accident
leads to temporary disability or inability to work.
 The compensation payable, in the event of loss of employment
due to total disablement, will be at 1% of the capital sum insured
(CSI) or Rs. 15000 whichever is less.
 You will receive this, according to policy terms, till such time that
you will be able to resume work.

10. Personal Accident Insurance
Other Benefits are :
 Accidental death
 If the policyholder dies in an accident then her nominee gets
accidental death compensation.
 Thus the family is financially secure in such situation.
 The compensation can vary from Rs 5 lakh to Rs 1 crore.

11. Personal Accident Insurance
Permanent total disability in an accident
 At times, despite medical help, the victim becomes
disabled for life.
 Then the insurance policy pays a certain amount,
depending upon the nature of the disability.
 The policy also covers loss of speech, loss of vision in
both eyes, and hearing loss in both ears.

12. Personal Accident Insurance
Permanent partial disability
 This is applicable if a person has partially lost their
hearing in one ear or suffered eyesight loss in one eye.
 Or, it could be that the policyholder has lost an index
finger, a thumb, or even a hand.
 In all these cases, the policyholder can approach the
insurer for a claim.

13. Personal Accident Insurance
Transportation benefit
 Say, the insured person is in a hospital outside 150 km of his
home.
 The immediate family member will incur certain
transportation expenses to reach the hospital.
 Some insurers also grant a family transportation benefit.
 The insurance company will reimburse these expenses up
to a maximum of Rs 50,000.

14. Personal Accident Insurance
Additional benefits
 Personal accident insurance policy can reimburse your
medical costs caused by accidents.
 You also get coverage for ambulance costs.
 Some policies offer an home or vehicle alteration
benefits.
 The insurance may also cover other factors like funeral
expenses.

15. Personal Accident Insurance
 In the event of death or permanent total disablement of
the insured due to accident, the policy shall also provide
compensation towards Education Fund for the
dependent children as below:
 1. if the insured person has one dependent child below the
age of 23 years, an amount equal to 10% of the capital sum
insured (CSI) subject to a maximum of Rs. 5,000/-.
 2. if the insured person has more than one dependent child
below the age of 23 years, and amount equal to 10% of CSI
subject to a maximum of Rs. 10,000/-

16. Personal Accident Insurance
Cumulative Bonus:
 Compensation payable under different clauses of the
policy viz. death, loss of limb(s) sight and permanent
total disablement arising out of accidental injuries
shall be increased by 5% thereof in respect of each
completed year, during which, the policy shall have
been in force, as no claim bonus.

17. PA Insurance- what it covers?
 No health check up is required
 The policy operates worldwide and is a 24 hours cover.
 Different coverage are available ranging from a
restricted cover of Death only, to a comprehensive
cover covering death, permanent disablements and
temporary total disablements.
 The cover is applicable upto Twelve calendar months
of its occurrence .

18. PA Insurance- Eligibility
 Person within age group of 5 to 70 years can take the
Policy
 Persons above 70 years upto 75 years with a loading of
10% on premium, can also take the policy.
 Above 75 years upto 80 years with a loading of 20% on
premium, but the cover shall be restricted to Death
Benefit (Table 1) only
 Medical expenses with an additional premium of 20% of
basic premium, can also be covered.

21. Personal Accident Insurance
Exclusions :
 Your insurer will not cover any loss arising out of acts of war
or terror.
 It will not cover any claims regarding existing physical
disabilities or pre-existing diseases.
 The exclusions also comprise mental disorders, HIV or AIDS,
and congenital anomalies.
 The insurer will not honour any intentional injury claims.
 Any injuries arising from participation in adventure sports
come under exclusions as well.
 This includes activities like mountaineering, bungee jumping,
and river rafting.

22. How to Choose Insurance Policy?
 Premium cost - The premium is the most critical part of
insurance policy because this amount is what you have to
pay regularly to keep your cover going.
 Tenure
 Affordability: Which is cheaper?
 Convenience - fast and easy to purchase in just a few
clicks. No medical check-up is required, unless otherwise
stated.
 Tax benefits
 Add-ons - In most term insurance policies, there are
certain add-ons along with the basic life cover. Therefore,
you need to choose plans with those add-ons that serves
your purpose.

23. Risk Cover – with different types
of Insurance
Life Insurance - Endowment Plan Life Insurance - Term Plan Personal Accident Policy
A savings plan fulfils your needs related to
savings and protection (financial health and
future of Family) (provide guaranteed maturity
benefits if you survives till the end of policy term)
Term insurance policies only cover the
risk and fulfils the need for protection
(i.e.future of Family) but there will be
no maturity benefits)
Personal insurance policies cover the risk and
fulfils the need for protection (financial health
and future of self & Family), including
compensation for Loss of Income due to
injury/accident
No Payment for permanent Disability (like: Loss
of 2 legs, 2 hands, both the Eyes, etc.)
No Payment for permanent Disability
(like: Loss of 2 legs, 2 hands, both the
Eyes, etc.)
100% Payment for permanent Disability (Loss
of 2 legs, 2 hands, both the Eyes, etc.)
No Payment for partial permanent Disability (like
: Loss of 1 leg, 1 hand, one Eye, etc.)
No Payment for partial permanent
Disability (Loss of 1 leg, 1 hand, one
Eye, etc.)
Yes, Partial Payment for partial permanent
Disability (Loss of 1 leg, 1 hand, one Eye, etc.)
No payment for loss of income due to temporary
disability
No payment for loss of income due to
temporary disability
Yes, payment for loss of income due to
temporary disability

24. Comparison of what you will get at the end of Policy
period (Survival / Maturity Benefit)
 For the comparison purpose the amount insured (cover) is kept
at INR 50.00 Lakh across all policies. Hence the amount of
premium will vary according to the type of Policy. The highest
premium will be for Endowment type Life Insurance Policies.
And, you will invest the difference in the premium amount in
other investment options like Public Provident Fund (PPF), which
is expected to give interest @ rate of 7.1% per annum.
 Other basic information taken for comparison purpose are:
 One who taking the insurance (Insurer) is 35 Years old Male,
Non-Smoker , Policy Term is 35 Years ( i.e. cover is till 70
Years of Age).
 Annual Premium, Paid regularly, throughout the policy period
(i.e. for 35 years) and live beyond 70 years of age.

25. Cover : 50.00 Lakh (a)
Life Insurance -
Endowment Plan
(b)
Life Insurance -
Term Plan (c)
Personal Accident
Policy
(Comprehensive,
including Medical)(d)
Premium (in INR) 1,42,292.00 8050.00 5724.00
GST @ 18% 25,612.56 1449.00 1030.32
Premium including GST @18%
(Row 2+3)
1,67,904.56 9499.00 6754.32
Balance amount available for
investment after paying the
premium (b4-c4) & (b4-d4)
0.00 1,58,405.56 1,61,150.24
Expected Return
8%
(between 4 - 8%)
7.1%
(for the investment
portion in PPF)***
7.1%
(for the investment
portion in PPF)***
Maturity Benefit (Value) after
35 Yeras (in INR)
1,24,50,000 > 2,26,97,857.00 > 2,26,97,857.00
*** Investment in PPF is taken as 1,50,000 per annum for which Tax benefit is available

26. Claim Settlement Ratio

27. Comparison of different Insurance
Companies

28. Some PA Plans