Difference between life, health, and personal accident insurance
Life, health, and personal accident insurance give financial security. Here’s a quick glance at the basic difference between life, health, and personal accident cover.
Life insurance
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Health insurance
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Personal accident insurance
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Offers life cover up to the chosen tenure.
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Offers coverage for medical expenses.
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Offers coverage only for injuries or death caused due to an accident.
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Get the sum insured on maturity. In case of the insured’s death, the nominee receives the sum insured.
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Get coverage for hospitalisation, and pre- and post-hospitalisation expenses. Covers daycare procedures and domiciliary hospitalisation expenses.
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Get coverage for treatment and hospitalisation for any accidental injuries. Covers permanent partial or total disability and temporary partial or total disability.
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Beneficial for sole breadwinners in the family to plan their financial health.
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Beneficial for all age groups, as it gives coverage against expenses incurred during medical emergencies.
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Beneficial for all age groups to deal with the treatment costs incurred due to an accident.
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Difference between personal accident insurance and term insurance
Personal accident insurance provides financial coverage for injuries, disability, or death resulting from accidents, ensuring protection against unexpected mishaps. In contrast, term insurance focuses on providing financial benefits to beneficiaries in case of the policyholder’s death during the policy term, regardless of the cause. For those specifically concerned about accident-related risks, accidental death insurance is tailored to cover fatalities directly caused by accidents, offering specialised support and peace of mind.
Personal accident insurance vs. Term insurance
Feature
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Personal accident insurance
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Term insurance
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Coverage
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Covers injuries, disability, or death resulting from accidents.
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Provides financial benefits to beneficiaries upon the policyholder's death during the policy term, regardless of the cause (excluding specific exclusions).
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Cause of claim
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Only accidents.
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Death due to any reason (natural or accidental, excluding specific exclusions like suicide in the first year).
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Disability benefit
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Provides compensation for disability resulting from accidents.
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No disability benefits – only death is covered.
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Payout type
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Lump sum or periodic payments for disability; lump sum for accidental death.
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Lump sum payout to the nominee upon the policyholder's death.
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Premium cost
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Generally lower than term insurance.
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Higher than personal accident insurance, depending on coverage amount and policy term.
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Medical checkup
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Usually not required.
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Often required before issuance.
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Best for
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Individuals seeking protection against accident-related risks.
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Individuals seeking financial security for their family in case of untimely death.
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Additional note
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Accidental death insurance specifically covers fatalities caused by accidents.
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Term insurance provides broader coverage for death from any cause during the policy term.
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Key points emphasized:
- Personal accident insurance: Focuses on accidents, covering injuries, disability, and death.
- Term insurance: Focuses on death benefits, providing financial security to beneficiaries regardless of the cause of death (with exceptions).
- Accidental death insurance: A specific type within personal accident insurance that targets fatalities from accidents.
Difference between personal accident insurance and critical illness insurance
Both personal accident insurance and critical illness insurance provide financial protection, but they serve different purposes.
Personal accident insurance covers accidental injuries, disabilities, and death caused by unforeseen events. It provides compensation for medical expenses, hospitalisation, and income loss due to temporary or permanent disabilities. In case of accidental death, the nominee receives a lump sum payout, ensuring financial stability for the family.
In contrast, critical illness insurance covers severe health conditions such as cancer, stroke, and heart attack. Upon diagnosis, the policyholder receives a lump sum amount to manage medical treatments and ongoing expenses.
While personal accident insurance focuses on unexpected accidents, critical illness insurance provides financial support for life-threatening diseases. Choosing the right policy depends on individual needs and risk factors to ensure comprehensive financial security.
How to raise claims for personal accident insurance?
Here are two ways in which you can raise claims for personal accident insurance.
Cashless claim process
You can get cashless treatments at partner network hospitals across India. Check the list of the network hospitals beforehand to know the nearest hospital locations. It will help you during an emergency. Follow these steps to get file this claim:
Step 1: Inform your insurer within 48 hours of hospitalisation.
Step 2: Share the policy details or the patient’s policy cashless card and valid ID proof at the hospital’s insurance desk.
Step 3: Fill up all details in the pre-authorisation form and submit it at the hospital.
Step 4: To expedite the procedure, fill up a request form on the official portal of the insurer and also inform your insurer about the same.
Step 5: Your insurance provider might take up to two hours to review the application and inform you accordingly via SMS and e-mail.
Step 6: You can even check the status of the claim online.
The insurer will process the claim as per the terms and conditions after the completion of all formalities.
Reimbursement claim process
Here are some of the steps to claim a personal accident insurance policy:
Step 1: You can claim for reimbursement if you choose to visit any hospital of your preference. Promptly inform your insurance provider about the accident to initiate the claim process. This early notification is crucial for a smooth reimbursement claim.
Step 2: Submit all necessary documents within 15 days after discharge.
Step 3: The insurance provider will accept or reject the claim after reviewing all documents.
Step 4: Once approved, the insurer will transfer the amount to your registered bank account via NEFT.
Step 5: If your accidental insurance claim request gets rejected, you will receive a notification on your registered e-mail address and phone number.
Documents required to raise a claim for personal accident insurance
- Original policy documents
- Death certificate
- Beneficiary’s ID proof
- Age proof of the policyholder
- Medical certificate
- Discharge form
- Police FIR (in case of unnatural death)
- Hospital certificates/ records (in case of death due to illness)
- Post-mortem report (in case of unnatural death)
- Employer certificate and cremation certificate
Steps to buy personal accident insurance
Step 1: Evaluate your individual needs.
Begin by carefully considering your lifestyle, profession, and the potential risks you face daily. Do you have a physically demanding job or participate in adventurous activities? This assessment will help you determine the appropriate level of coverage required. Think about the benefits that are most important to you, such as coverage for medical expenses, loss of income due to disability, and the desired level of disability coverage.
Step 2: Explore and compare insurance providers.
Take the time to research and compare plans offered by different insurance companies. Look beyond just the premium costs and delve into the specific features of each policy, including the claim settlement ratios, which indicate the company's reliability in paying out claims. Reading customer reviews can also provide valuable insights into the experiences of others with the insurer.
Step 3: Gain a thorough understanding of the policy coverage.
Before committing to a policy, meticulously review the inclusions and exclusions. Understand what events and situations are covered, such as accidental death, disability (partial and total), and hospitalization benefits. Pay close attention to the exclusions, which might include self-inflicted injuries, accidents occurring under the influence of alcohol or drugs, or pre-existing medical conditions.
What are the tax benefits under a personal accident policy?
A personal accident insurance policy not only provides financial protection against accidental death or disability but can also offer tax benefits. As per the Income Tax Act, premium payments for personal accident insurance policies are eligible for tax deductions under Section 80D.
The maximum limit for tax deduction is Rs. 25,000 for insurance premiums paid for self, spouse, and dependent children. If you are over the age of 60, this limit increases to Rs. 50,000. Furthermore, in case of disability or accidental death, the claim amount received under a personal accident insurance policy is tax-free under Section 10 (10D) of the Income Tax Act. By availing a personal accident insurance policy, you can not only secure your financial future but also enjoy tax benefits.
