Should you buy personal accident insurance if you already have life cover?

A standalone personal accident insurance plan is more comprehensive and covers a higher number of accident-related risks as against an accidental death benefit rider available with a term plan

Most of us are aware of the need of purchasing life insurance and health insurance. However, very often one important risk cover is under-represented in most individual portfolios – accident insurance. When asked whether they have bought accident insurance, some immediately point to the accident disability rider they have bought along with their life cover. However, they might have missed considering taking a standalone personal accident cover from a non-life insurance company.

Many of us relate the term accident with accidents arising out of collision of vehicles on the road or transport related accidents. However, it is not always the case. Accident insurance, or personal accident insurance as it is known in the industry, is an important cover one must have. Accident for the purpose of insurance includes many incidents beyond road accidents. There are multiple situations in life that make us vulnerable to loss.

While accident riders offered by life companies do provide some additional protection, non-life companies also offer standalone personal accident cover with several protection features against untoward incidents.

Let’s look into the same of the aspects of having accident insurance cover.

Key differences

A standalone personal accident insurance plan from a general insurance company is more comprehensive in nature and covers a higher number of accident-related risks as against an accidental death benefit rider available with a term plan. It has a wider scope of coverage as it offers cover for accidental death, permanent total disability, permanent partial disability, temporary total disability, accident hospitalisation, education grant and transportation of mortal remains.

On the other hand, an accidental death benefit rider attached to a term plan provides cover against only accidental death and accidental total disability in some cases. The rider will offer a lump sum amount to the nominee in case of untimely death of the insured. This includes accidental death. Loss of income due to disability or inability to work is not covered. “In most of the plans, to get additional coverage like accidental permanent disability, one will have to attach another rider which covers this risk. Therefore, for every additional risk, an appropriate rider will have to be attached to the base term policy,” says Mahavir Chopra, Director, Health, Life & Strategic Initiatives, Coverfox.com.

Underwriting norms

Life insurance companies go for medical and financial underwriting while issuing life covers. That means one may have to go for medical tests and have to submit one’s income tax returns of past years to prove his earnings capability. One gets to buy accident benefit if and only if he gets the life cover. That makes many in the higher age bracket of 45 years and above to go without cover or with inadequate sum assured.

Non-life insurance companines however rely on financial underwriting only. And hence acquiring the accident insurance is possible even for individuals in high age group.

Which is more affordable?

One must keep in mind that while there is wider coverage under standalone personal accident insurance, it might also require a slightly higher premium payment.

The indicative difference of premiums for both is tentatively as under (as per data provided by Coverfox): 

Sum Insured

Premium (Rs.)

       Standalone Personal Accident Insurance Plan

Accident Death Benefit Rider

Rs. 10 Lakh

Rs. 950/-

Rs. 600/-

Rs. 25 Lakh

Rs. 3,205/-

Rs. 1,500/-

Rs. 50 Lakh

Rs. 5,450/-

Rs. 3,000/-

Note: The premium rates shown above are indicative in nature and are based on the sum insured and are irrespective of the age

An aspect to be noted is that a standalone personal accidental insurance plan is a short-term plan ranging from a period of 1 year to 3 years only while a rider is valid until the end of the base plan. “The premiums for an accidental death benefit rider will remain constant for the entire rider term. On the other hand, the premiums for the standalone personal accident insurance may change with every renewal,” Chopra points out.

However, a big advantage of the accident insurance policy is the premium is not dependent on the age of the insurance buyer. “For term life insurance, the major factor determining the premium is the age. For personal accident cover, occupation plays a major role in determining the premium,” Rachit Chawla, CEO, Finway says.

What to buy?

In general, insurance experts feel if you are looking for an accident cover, a standalone personal accident cover works better. Naval Goel, CEO, PolicyX.com says one must purchase a personal accident cover from a general insurance company. “A standalone personal accident insurance offers a wider cover and provides the required cover to the nominee as well in case of the policyholder’s demise. In case you don’t have a standalone cover, you must go for a personal accident rider when you the purchase your life insurance,” Goel says.

Coverfox’s Chopra agrees. “A standalone personal accident insurance from a general insurance company is a far better choice for people who are looking at covering all the risks related to an accident. The duration for which a claim can be filed for a death resulting from accidental injuries is also higher in standalone plans while that in the rider, it is just 180 days (6 months),” Chopra points out.

Also, a person has complete freedom in choosing his sum insured under a standalone personal accident insurance policy while the rider sum assured is restricted. The total rider premiums under a policy cannot be more than 30 per cent of the base policy premium. Thus, if more than one rider is to be attached, the sum assured for the accidental death benefit rider might have to be brought down.

Buy according to situation

Chopra points out that though standalone policies have a wider cover, there are situations in which each of these may be considered. Thus, a rider is a better option if one is looking for flexibility and convenience along with longer policy duration. An accidental death benefit rider can be easily attached to an existing term plan at the time of yearly renewal or it can be opted for right at the start of the policy without any additional paperwork. The premiums are also combined with that of the base plan, so one does not have to remember the due dates and run the risk of rider lapsation. “If someone is looking for comprehensive coverage with a high sum insured, then a standalone accident insurance policy is the best option. If one wants flexibility, convenience, fixed premium rates along with a longer coverage duration and can do with limited coverage and restricted sum assured then attaching an accident benefit rider is a good option,” Chopra says.

Whatever the situation, all of us are exposed to accidents. It is better to buy some protection even if you feel you are not vulnerable.