Divya Gandhi, head of general insurance at Emkay Insurance Brokers, recounts two cases where a personal accident (PA) claim was denied. In one, the policy holder, who had a limp, had an accident and fell down. The company decided he fell down because of the disability and not due to the accident. In another case, a lady who had a slip disc condition, went on a picnic and slipped. The company denied the claim, saying since she already had a medical condition, they are not bound to pay.
In the first case when the policy holder approached a court, he got a ruling in his favour. It said the company should have taken into account the disability at the time of underwriting. In the second case, the policy holder did not approach the court and did not get her claim.
In yet another case, a policy holder died on slipping down the stairs of his building after a heart attack. His PA cover was denied on the ground that the cause of death was heart attack and not slipping down the stairs. Here, too, the claim was allowed when the holder's nominees approached the court.
Does this mean that with PA covers, policy holders can get their rightful claim only by approaching a court? Is this uncertainty in getting the claim making people wary of buying these?
According to Renuka Kanvinde, assistant vice-president, Bajaj Allianz General Insurance, if the death is due to an accident of any kind, the claim will be honoured. The reason for the accident does not matter.
"Deaths on account of accidents due to epileptic attacks are more common than due to a heart attack. But these claims are also paid. If the post mortem report certifies that the injury or death has been caused by an accident, then the policyholder has to be paid, immaterial of what was the reason for it,'' she adds.
One reason why the PA cover has not gained acceptance is that its features overlap with those for health and life insurance, says Mukesh Kumar, executive director, HDFC Ergo General Insurance. "Since most people have one or both of these products on them, people consider the PA an additional expense and tend to avoid that,'' he says.
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For accidental death claims
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People buying a term cover of Rs 1 crore is common these days. Such people should ideally take a PA cover of an equivalent amount, says Balakrishnan Venkataramani of Vensiva Financial Solutions. "Accidents are unexpected and can occur anytime. If your family needs Rs 1 crore in your absence, then they will need the same amount if you are disabled due to an accident. Remember that even you will have to be provided for in such a situation,'' he points out.
An add-on feature of PA covers is the cash benefit in case of hospitalisation or disability due to accident. For instance, Bajaj Allianz offers up to one per cent of the sum insured, or up to Rs 5,000 on a weekly basis, in case of permanent total disability, in case of the premium personal policy.
Some companies pay up to Rs 10,000 a day in case of hospitalisation, depending on the sum insured. In some cases, this feature is available only for policies that have a sum assured of at least Rs 20 lakh. Usually, the cash benefit is paid up to six months.
Since a PA cover is a low-ticket product and does not offer high commissions to agents or brokers, it is not sold very actively, says Sharad Mathur, senior vice-president at SBI General Insurance. "There is not enough awareness about PA covers, since it is not pushed."
What PA covers
A PA policy covers death, permanent total and partial disability, temporary total and partial disability, broken bones, burns and ambulance costs. In a disability, a certain percentage of the sum assured, depending on the extent. For instance, the compensation will depend on whether there is loss of one limb or both, one eye or two eyes, and so on.
There are add-on benefits such as repatriation of mortal remains, bonus for children's education, per-day benefits in case of hospitalisation due to accident, weekly compensation in case of loss of job of the earning member and so on.
There are floater plans that can be taken to include the entire family under a single policy, Mathur says.
Excluded
However, certain varieties of deaths and accidents can be denied under a PA. For instance, death due to natural causes or illness, suicide, self-inflicted injuries, alcohol, drugs or other intoxicants are not covered.
Some standard exclusions are injuries on account of civil or foreign wars, alcohol/drug influence, AIDS/HIV, duty with military/police force or a paramilitary body or from participation in unsafe sports.
Eligibility
The earning capacity and job are the primary conditions that determine the sum assured and premia. An application could get rejected due to physical deformity or a hazardous job profile. The risk classes are divided into Class I, II and III, with I being the lowest and III being the highest risk. For someone working in a factory, the premium would be the highest, slightly lower for someone in a sales job that involves travelling and still lower for someone with a desk job.
Today, PA covers are available with bank deposits, loans or credit cards. Some professional organisations take group PA covers for members. Many companies also provide it for employees. However, in these cases, the sum assured is usually low, starting with a few thousands and going up to Rs 5 to 10 lakh. Besides, these usually cover only death and not disability.
"You can have any number of PA covers and your family can claim benefits under all the covers, provided they are aware of it. The cover is available even if you travel to a foreign destination," says Gandhi of Emkay.
However, certain countries might have an enhanced risk due to reasons such as unstable political situations, high incidence of crime, epidemic proneness, etc. These factors might call for a rejection or premium loading, says out Kumar of HDFC Ergo.
Premium rates
A Rs 5-lakh standalone PA policy for a 25-year-old is available for Rs 1,000. For a family of five (self, spouse, children and parents), a Rs 15-lakh PA cover can be bought for a little over Rs 7,500.
In case of a PA cover that is available with a bank deposit, the premium can be as low as Rs 500 for a Rs 10- lakh cover. But this might cover only death and not disability.
