Taking Cover. How standalone accident policies score

If you are planning to buy a personal accident cover, you may be confused whether to take a standalone policy offered by the general insurers or go for an accident rider with your life insurance policy. Here, we look at both options.

Benefits offered

Most accident riders offered with term plans are not comprehensive and restricted to cover only accidental death and permanent disability. The standalone accident insurance plans, on the other hand, offer wide cover for accidental death, permanent and partial disability, hospitalisation and family cover. They also provide optional add-ons such as child education benefit, cover for funeral expenses, road and air ambulance charges and expenses on treatment for fractures and, sometimes, even cover the outstanding loans and loss of income due to disability from accident. With these customised options, one can choose the add-ons based on his requirements and enjoy the benefit at a nominal cost.

Premium payable

The premium payable and the benefits offered vary among insurers. The standalone accident policies charge relatively lower premiums compared with riders under the term plans. For instance, in standalone accident insurance policy with ₹10 lakh cover, the annual premiums payable under Bharti AXA General Insurance and Apollo Munich Health Insurance standard plan are ₹943 and ₹1,297 respectively.

On the other hand, the riders under term plans that provide comprehensive accident benefits such as the ones from Aditya Birla Life and Tata AIA Life, charge an annual premium of ₹2,360 and ₹1,682 respectively for ₹10 lakh coverage. Please note the accident rider premium under other life insurers are low, as they cover only the basic accident cover.

For instance, for ₹10-lakh cover, the online term plans such as ICICI pru life iProtect Smart, SBI life eShild and Aditya Birla DigiShield charge an annual rider premium of ₹561, ₹590 and ₹756 respectively as they cover only accidental death. Similarly, Edelweiss total secure+ and HDFC Life 3D plus charge premiums ₹472 and ₹308 respectively for covering only accidental permanent disability.

The premiums charged under standalone policies vary based on the income level, the place of living and the nature of occupation of the individual. For instance, under Max Bupa standalone accident insurance policy with ₹10 lakh cover, the annual premium payable for an engineer working in an IT company is ₹1,219, which is lower than the annual premium of ₹1,829 payable for an engineer working in a mechanical or civil industry.

The premium under riders in life insurance varies based on the age of the policy holders and is linked to the base life cover.

Mostly, all standalone accident insurance policies pay the claims amount either in lump sum or regular pay. Under accidental riders, only few players provide regular pay while others prefer pay only lump sum. Most standalone accident insurance policies allow individuals to choose the sum insured between ₹5 and ₹30 lakh. The accident riders under life insurers allow the policyholders to choose the rider SI up to ₹2 crore or equivalent to the SI of the base cover.

Claim waiting period

In many situations, under accidental total and permanent disability benefit, a waiting period of three or six months is applied by the riders to pay the benefit to the policyholder. However, the waiting period is not applicable under riders for loss of sight of both eyes and loss of two or more limbs.

In standalone policies, there is generally no waiting period. The claim is settled as and when it is certified by a medical practitioner.

Standalone policies score over riders on agreeing to pay the claim amount if death happens within 12 months from the date of accident. But in most accident riders, they pay the claim amount if the death occurs only within sixmonths from the date of accident.

Tax advantage

All the rider premiums paid under life insurance are eligible for tax benefits under Section 80C of IT Act. But the premium paid under standalone policies offered by general insurance do not enjoy any tax benefit except the premium paid for hospitalisation benefit, if any, under section 80D.

Our take

Standalone personal accident policies are more comprehensive than the riders for accident cover that come with a term plan. They also help you save money.

COMMENT NOW