Road accidents pushes the whole family into financial nightmare. Think the plight of the family when the breadwinner gets admitted into hospital due to an accident. To avoid such situations, one must have an individual accident policy along with life and health insurance.
Venkat works in a top software company. He has a wife and 2 children. One day while returning from office, his bike was hit by a bus. He was left with severe injuries and unfortunately his right hand had to be amputated and 2 surgeries were done on his 2 legs. Though his disability is partial, it is permanent. It took 6 months for him to recover and he lost earning during this period. Venkat has health and life insurance policy and these paid for his hospital expenses. Like many of us, he did not take accident policy and that resulted in problems to his family.
While life insurance gives compensation in case something happens to the holder, health policy pays for hospital expenses. But what if you are unable to work for some time due to accident? Here is where accident policy comes useful.
Not only these…
In case of death from accident, some amount is paid towards education for children and also pays for hospital expenses per their regulations. Important think here is you should inquire whether the policy gives all the above before taking it.
How does it work?
Accidental insurance policy compensates mainly on 4 instances…
*Death from an accident: Pays the whole insurance amount to the nominee in case of death of the policy holder.
*Permanent total disability: There is every possibility of permanent total disability from an accident. This may cause the person not being able to work at all. This is called permanent total disability. This is paid 25% extra of total insurance amount. But, this changes from company to company and should inquire before taking it.
*Partial permanent disability: Accident may result in permanent partial disability and compensation is paid based on the disability incurred.
*Partial temporary disability: When fractures occur, one may not work for long periods of time and the person may not be able to work during this time. so, in order to compensate the loss of income, some amount is paid during the recovery period and this may be up to 100 weeks. The amount depends on the policy taken. One can get post hospitalization as well as family maintenance expenses from this policy.
What to look for…
For whom: You can take accidental policy for yourself, your partner and your children. A single policy can be used for the whole family.
Single policy: You can chose policy per your needs and financial condition. A comprehensive policy should cover accidental death, permanent total or partial disability. Only a comprehensive policy can cover all the above. A primary policy covers only accidental death and the premium depends on the policy you choose.
Policy amount: Individual insurance policy is given based on your income. You can get up to 100 to 120 times your monthly income. However, this keeps changing from company to company. If no claim is made in the first year, you can get 10% cumulative bonus the next year.
How to get compensation?
The insurance company should be informed within 30 days of accident. All documents like hospital bills, police FIR, medical tests, doctor reports, and certificate of disability should be submitted to the insurance company. Nominee can claim with the death certificate of the policy holder.
*let us examine the example here of Venkat whose salary is 42 thousand. Let us assume that he took 120 times amount of his monthly income. This makes his policy value 5000000. He will have to pay a premium of 5 to 7 thousand for this policy. As he could not go to his job because of accident, he will be paid 5000 per week, meaning for the 6 months he was out work, he will get 1,20,000. Since he is left with partial disability, he can get up to 70% of the policy amount (this is just for example and keep changing from company to company).
It is not always possible to prevent an accident. So, it is in our hands to save ourselves from financial crisis during such. It is always prudent for everyone to have arrangements for these situations.