A comparison of 4 Personal Accident & Disability Insurance Covers

You likely have a Term plan for life insurance and a personal health cover too. But if I ask you about disability insurance, you are likely to look at me with surprise. What is that? One of the most ignored protection is that of disability insurance.

The term plan protects your dependents financially against loss of life of the breadwinner – the family gets adequate financial assistance which can hopefully last their lifetimes and help them take care of living expenses as well as various financial milestones such as kids’ education.

With health insurance / mediclaim, you create a cushion against high medical bills due to hospitalisation so that they don’t leave a big hole in your pocket.

Now the third scenario. What if you are alive but left disabled to engage yourself in any economic activity? The Term plan is useless now (hey, you are alive!) and the health insurance will only provide for the hospital & medical bills.

What about the living expenses or funds to provide for your kid’s education?

That is where the Accident and Disability Insurance comes to your assistance. It gives you payout for Permanent Disability, Partial Disability as well as Temporary Total Disability / Loss of Income.

In India, this whole combination is offered under a bad disguise of Personal Accident Policies.

Let’s understand more.

Personal Accident or PA policy benefits can be divided into 2 categories.

Main benefits – There are 4 of them.

1.       AD – Accidental Death Benefit – 100% of sum insured

2.       PTD – Permanent Total Disability benefit ( If out of 6 body parts, that is, 2 eyes, 2 feet and 2 hands – if any two lost in any combination – 1 eye and 1 foot or 1 eye and 1 hand or  1 foot and 1 hand or both eyes or both hands or both foot) – 100% of sum insured is given

3.       PPD – Permanent Partial Disability (depending on which body part gets affected, accordingly % benefit is defined in a policy. For example, if one eye is lost, then 50% , if a thumb is lost then 5%, etc. – the % payout is calculated on the Sum Insured.

4.       TTD (Temporary Total Disability) or loss of income benefit – If due to an accident a person is bed ridden and unable to engage economically with their work , thus resulting in loss of income, then insurance company pays out a particular amount on a weekly basis upto 100 weeks or till the time the person is recovered, whichever is earlier. The weekly payout differs from company to company.

Secondary Benefits – Below are some of the secondary benefits:

•  Cost of crutches and wheelchair
• Cost of artificial limb
• Fracture/burns
• Air ambulance
• Funeral benefits and repatriation of remains
• Child Education Benefit
• Loan coverage Benefit

All policies define their own payouts for the above benefits. Some companies may not even have payouts for some of the above.

A comparison of 4 Personal Accident & Disability Insurance Products

This is a summary comparison of 4 products from Tata AIG, HDFC Ergo Health, Max Bupa and Bajaj Allianz.

For a more detailed comparison across sub plans of these policies, you may download the excel file given below. (Available only to premium members)

I am sure you have more questions.

I already have an add on accident policy cover with my term plan. Do I still need another cover?

The add on cover may not be comprehensive enough to take care of all requirements. In some term plan add ons, the accident benefit is limited to provide an Accidental Death cover and a waiver of premium in case of disability.

Payouts for Permanent or Partial Disability or loss of income benefits are not included. You should check with your company as to what all is covered.

How much cover should I take for Disability Insurance?

This is a very important question. If you look at the applicability of such covers, the importance is no less than a term plan. Ideally, you should have a disability cover equal to your term plan cover.

If that is not what you want to begin with, then you should optimise your cover to at least provide for the right loss of income benefit under Temporary Total Disability. You should speak to the company or your insurance advisor about this.

Here are some more facts about Personal Accident & Disability Insurance products:

1. Personal Accident claims are applicable worldwide except TTD / Loss of income benefit.
2. No claim Bonus benefit is available where Sum Insured goes up by x % every year upto 50% of sum insured.
3. Benefits are not provided for exclusions such as suicide or self injury or participating in activities excluded under the policy.
4. If you include your spouse within your policy, s/he has a cover of upto 50% of your cover.
5. Child Education benefit is provided only if the child is covered as a part of the policy.
6. Salaried individuals are offered cover by all companies. However, self employed have limited choices.
7. Premium depends on your risk profile. Either you are in:

• Risk profile 1 – Low risk such as doctors, bankers and teachers.
• Risk profile 2 – High Risk such as mine workers and mountaineers (invites higher premium)

Hope this information helps you zero in on the right policy and amount for your disability insurance needs.

If you wish to get custom advice for buying your personal accident and disability insurance cover, do get in touch.