Personal accident insurance policies are must-haves if you are the bread winner of the family.Accidents, be they due to forces of nature or vehicle crashes, are covered under these policies.

A health insurance policy pays for your hospitalisation expenses in case of an accident. But God forbid, if you are unable to continue with an active work life due to a serious injury, you need an income supplement.

Accident insurance policies step in here. They pay your family in the case of accidental death, and compensate you for permanent total or partial disability. The sum insured offered, however, is linked to the individual's income.

Your compensation in accident insurance policies depends on the nature of impairment. A 'permanent total disablement' is an injury that prevents the insured from attending to his normal duties for a continuous period of more than 12 months with no hopes of improvement.

A 'permanent partial disablement' is an injury that results in loss of eyesight, speech, or a hand or foot. If it's a permanent total disablement, many insurers pay more than 100 per cent of the basic sum insured.

With Bharti AXA, for instance, if the basic sum insured (for accidental death) is ₹10 lakh, for permanent total disablement, a one-time settlement of ₹15 lakh (150 per cent of basic sum insured) is paid. For permanent partial disablement, up to 75 per cent of the basic sum insured is paid. But here are the other facts you may not know.

Many accident insurance policies cover temporary disablement too. Assume that due to a fracture or injury you are not able to carry on your normal routine for some time. In such cases, insurers provide a daily/weekly benefit.

In Bajaj Allianz's accident policy, for instance, ₹5,000 per week for a maximum of up to 100 weeks is given for temporary total disability. In Royal Sundaram's accident policy, for temporary total disablement, the insured is given ₹3,000 a week for a maximum of 104 weeks.

Like other insurance policies, in accident insurance too, there are a set of disclosures that you need to make while signing up. But there will be no questioning on your medical history.

Set of disclosures

In life or health insurance, the premium for the policy depends on the individual's age and lifestyle (whether a smoker/non-smoker). But, in case of accident insurance policies, the premium is the same for individuals across age groups.

What however influences the premium is one's profession. Some insurers do not cover aircraft pilots and crews and those in hazardous occupations under these policies. Some also explicitly exclude injuries caused by risky sports, such as bungee-jumping and para-gliding.

A personal accident insurance policy costs less than a term life insurance cover. Most basic accident policies that cover accidental death and permanent disability are available for a price of ₹7/8 a day for a sum insured of ₹20 lakh. This works out to an annual premium of ₹2,500-3,000.

A term life policy for the same sum insured would cost about ₹4,000-5,000 a year for an individual of 30 years; the premium is higher for the 40-plus age group.

However, one hitch with accident insurance is that there are few high-value covers on offer. While in life insurance, policies of ₹1 crore are commonplace today, in accident insurance, most insurers offer up to ₹10/25 lakh at the most. Those that offer higher sums insured ask for a disproportionately high premium.

Royal Sundaram General Insurance offers accident cover for up to ₹75 lakh. The cost of this policy is ₹20,942 annually (without taxes). Individuals of 30-40 years of age may get the same sum insured under a life insurance policy for a lower premium of ₹8,000-10,000.

Tata AIG's accident insurance policy gives a sum insured of up to ₹1 crore. The premium on this is ₹15,140 (inclusive of taxes).

But the sum insured is linked to one's income. In Tata AIG's accident policy, for instance, the sum insured given will be only 10 times the annual income for salaried individuals and 20 times the annual income for the self-employed.