Life is unpredictable. You are having fun on a bike ride with friends one moment, and the next, an incident may change everything. That’s where personal accident insurance becomes your safety net to help you through such unforeseen circumstances without breaking the bank. But the big question is: How much personal accident insurance do you need? Let’s break it down so even a 15-year-old can understand its importance and make smarter choices later in life.
What is Personal Accident Insurance?
Now that we know that the numbers do indeed matter, it is time that we understand personal accident insurance, which is this kind of deal for finance wherein someone gets himself injured, disabled, or God forbid, dead due to an accident. It might then be called a soft cushion that cushions that financial blow whenever an unexpected medical expenditure, perhaps hospital stay or even losing one’s pocket money.
Personal accident insurance is not term insurance. This term insurance policy, however, can support your family with financial funds when you pass away. On the other hand, personal accident insurance will protect you by avoiding some economic impact during your lifetime when an accident might happen.
Why You Need Personal Accident Insurance
Accidents are among the major causes of disability and death. Whether it’s a slip on a wet floor or a road mishap, accidents never discriminate. And that’s why you need personal accident cover:
- Medical Expenditures: Healthcare costs are soaring through the roof. In fact, one visit to the emergency room could be pretty expensive.
- Loss of Income: In case of a mishap that incapacitates the individual from working, personal accident insurance assists in replacing this loss.
- Peace of Mind: Once you know you’ll have financial support, it frees your mind to be able to concentrate on more important issues rather than bills.
Factors to Consider When Determining Coverage
The personal accident insurance need depends on numerous factors:
- Your Lifestyle: Are you an adventure sports lover, a nature trekker, or a paragliding freak? Or maybe you like peaceful times reading? More likely than not, the risk of getting into an accident will also depend on what you do.
- Your Job: Some jobs are riskier than others. Take the case of construction workers. They are much more at risk than an office-going employee. Sometimes, a risky job would necessitate greater coverages.
- Family Responsibilities: Being the bread earner, their financial security entirely depends on you. In that case, there is a great need for coverage to ensure the family is financially secured in the event of a mishap involving you.
- Present Policies: You may already be covered under other health insurance policies or term insurance. They cover specific issues, but with personal accident cover, you just get covered specifically for accidents only.
How to Calculate the Ideal Coverage
In determining how much personal accident insurance you need, there are the following steps:
Step 1: Evaluate Your Annual Income
Thumb rule: At least 5-10 times your annual income should be the cover. For example, if you earn ₹50,000, then your cover should be between ₹3 lakh to ₹6 lakh, so that you can continue the lifestyle even when an accident puts you out of work and so will your family.
Step 2: Medical Costs
Consider healthcare costs in your locality. For example, you may require cash to undertake surgery due to an injury such as broken legs or head injuries. Ensure that the policy you select can pay for such costs.
Step 3: Add Long-Term Disabilities
If you permanently disabled after the accident, you will need money to make your house changeable, money to hire special care, and a lot of money to provide for all your daily needs. Consider these expenses when you choose a coverage.
Step 4: Add Debts
If you have a loan, either on the house or in the car loan, ensure that your insurance will take care of these responsibilities. This ensures your family does not become your heirs.
How to Make the Correct Choice
While choosing a personal accident insurance plan, one should consider the following points:
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Look for Comprehensive Coverage: Some policies provide not only the temporary disability but also offer coverage for accidental death as well as permanent disability. Some may even support the education of children or provide hospital cash allowances.
- Know what is excluded: Not all accidents will be covered. For instance, injuries resulting from suicide, intoxication, or illegal activities may be considered excluded. Read the fine prints.
- Compare Policies: Insurance is not a product for one and all. Compare various plans online and settle for one that suits your need and budget.
- Check Claim Settlement Ratio: Aim for the insurers with the highest claim settlement ratio. In other words, they would be trustworthy and prompt in settling claims.
More Information: Bundling Up Insurance Policies
Add to your personal accident insurance other financial products like health insurance and term insurance plan. Here’s why:
- Health Insurance: Covers illnesses and medical emergencies, but may not fully cover accident-related costs.
- Term Insurance Plan: It gives the insurance facility to your family in case you pass away so that they will not be left in a financial mess.
All these policies are required for a sound safety net both for you and your family.
How Much Does It Cost?
One of the best things about personal accident insurance is that it is very inexpensive. For a relatively low premium, you can secure high coverage. For example, a ₹5 lakh policy might cost you just a few thousand rupees annually, depending on your age, lifestyle, and occupation.
Real-Life Examples
- Ravi is 25 years old and is an adventure enthusiast. He opted for a personal accident cover of ₹3 lakh. On a trek, he slipped and fractured his leg. His insurance covered the hospital bills and income replacement during recovery.
- The Family Breadwinner Vikram is 40 years old with two kids. He took a ₹6 lakh policy. A car accident made him temporarily disabled. All of his family expenses were covered through his policy, such as the school fees for his children.
Conclusion
Personal accident insurance forms very essential constituent of an all-rounded financial plan. No one can predict accidents, but one can prepare for them. There can never be too much or too little cover; it depends on one’s income, lifestyle, family responsibilities, and existing insurance policies. By investing in personal accident insurance, one is not just saving oneself but ensuring peaceful sleep for the family.
Remember that accidents are uninvited guests. With personal accident insurance, it’s time to be prepared on their monetary consequences. Thus take control of your future and look up to ensure you have the right cover in place. It is a small price for a safe tomorrow.
