Personal accident insurance is available in the insurance sector with a variety of other products. They all have their own features and benefits which make it tricky to choose. To eradicate this confusion, a standard product with common coverage and policy wordings is going to be introduced in 2021.
The IRDAI has decided to mandate all general and health insurers to offer a standard personal accident insurance product. This will be a standard personal accident product with common coverage and policy wordings across the industry, which every insurance customer should know, Neeraj Prakash, Managing Director, Shriram General Insurance, told FE Online.
Standard personal accident- the mandatory cover
According to the Managing Director-Neeraj Prakash, every general and standalone health insurer, who has been issued a certificate of registration to transact general and /or health insurance business, shall mandatorily offer this product. The standard product should have basic mandatory covers offering protection against death, permanent disablement, or partial disablement due to accidents.
Common Features of Standard personal accident insurance product –
The purpose of standard cover is to provide protection against accidental death, permanent and partial disablement and cover expenses towards hospitalization too. The standard insurance policy term would be for one year.
The standard personal accident cover should have basic mandatory covers, which should be uniform across the market. The standard product will need to be offered with a policy term of one year and also cover expenses towards hospitalization, said Mr. Prakash.
The Sum Insured
According to the Managing Director-Mr. Neeraj Prakash, The insurer may determine the price keeping in view the covers proposed to be offered subject to complying with the norms. Minimum sum insured shall be Rs 2.5 lakh and a maximum sum insured shall be Rs 1 crore. Beyond that, insurers can offer on their own and use the same name for the product if all terms and conditions remain the same.
Benefits of Standard Personal Accident Policy cover –
In the case of permanent total disablement, the cover provides 100 per cent of the sum insured as per the situation. Under the standard policy towards death or permanent total disability, an appropriate claim is available for the insured person. Also, a one-time education grant of 10 per cent of the base sum insured, each shall be payable, for a maximum of two dependent children of the insured.
Avail optional add-on benefits –
The temporary total disablement can be covered as an add-on by paying extra premium. “Under this cover, you will be entitled to compensation at the rate of one per cent of the sum insured per week till you return to work or up to 100 weeks, whichever is earlier. Likewise, hospitalization expenses, too, will be covered to the extent of actual expenses incurred by you, if you buy an optional add-on cover,” said Prakash. However, these will be capped at 10 per cent of the sum-insured, he added.
Termed education grant is the third optional coverage offered by the insurer. The insurer will pay a one-time educational grant of 10 per cent of the base sum insured for up to two dependent children, not older than 25 years in case of accidental death or permanent disablement. As per the policy terms, payment will only be made if the child is pursuing a full-time course in an educational institute.
Standard Personal Accident Claim
During the policy period, if the policyholder face death or permanent disability due to injury, the benefit would be equal to 100 per cent of sum insured on base cover payable by the insurer. The death of the insured person occurs within 12 months from the date of the accident.
Increase in Sum Insured
For each claim-free policy year, the sum insured should be increased by five per cent. The policy must be renewed without a break subject to a maximum of 50 per cent of the sum insured. If a claim is made in any particular year, the cumulative bonus accrued may be reduced at the same rate at which it has accrued.
Why is Personal Accident cover important?
“A personal accident policy is a must-have in your portfolio. Youngsters tend to put off life and health insurance purchases if they have no dependents or believe they are in perfect health, but the risk of accidents cannot be washed away. While these limitations are part of the standard cover as well, the fact that it has been devised but the regulator will offer comfort to policyholders,” said Mr. Prakash.
“The probability of policyholders feeling short-changed by the insurer would be lower as they would know that the clauses are uniform across companies,’’ he added.
You can read a full article here: https://www.financialexpress.com/money/insurance/standard-personal-accident-insurance-plan-april-1-2021-features-benefits-explained/2158756/