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Accidents are unpredictable events that can have severe consequences on an individual's life and the lives of their loved ones. In term insurance, accident cover plays a vital role in providing an additional layer of financial security in case of accidental death or injury of the policyholder. Let us understand what accident cover is in term insurance, why it is important, the types of accident coverage available, and how it works with a basic term plan.
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Accident coverage in term insurance refers to an add-on rider or feature that provides additional benefits to the policyholder or their nominees in the event of accidental death or injury. While a standard term insurance policy offers coverage for death due to any cause (natural or accidental), accident coverage specifically targets incidents resulting from unforeseen and unintended events. This coverage is designed to offer financial aid on top of the base sum assured in cases where the policyholder is severely injured, permanently disabled, or suffers an untimely death as a result of an accident.
Term Plans
Accident cover in term insurance is important for various reasons:
Financial Protection: Accidents can lead to significant financial burdens, including medical expenses, loss of income, and other associated costs. Accident cover provides financial support to manage these expenses and ensure the policyholder's family is not left in a precarious financial situation.
Low Premiums: With an accidental death benefit rider you can get enhanced cover at nominal premiums within the same plan.
Enhanced Coverage: By adding accident coverage to a term insurance policy, policyholders can enhance their protection. This rider ensures that in case of accidental death, the beneficiaries receive an additional sum assured, over and above the base policy sum assured.
Protection Against Disability: Some accident riders provide coverage for accidental total permanent disability. This can be invaluable for policyholders who may no longer be able to work and earn a living due to their injuries.
Peace of Mind: Knowing that there is a safety net in place in the event of an accident provides peace of mind to the policyholder and their loved ones. It assures them that their financial well-being will be safeguarded even in the face of unforeseen events.
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Accident cover in term insurance typically comes in different forms, offering varying levels of protection. The most common types include:
Accidental Death Benefit Rider: This term insurance rider provides an additional sum assured to the beneficiaries if the policyholder dies due to an accident. For instance, if the base term insurance sum assured is ₹1 crore, and the accidental death benefit rider is also ₹1 crore, the beneficiaries would receive a total of ₹2 crores in the event of the policyholder's accidental death.
Accidental Disability Benefit Rider: This rider offers financial protection in case the policyholder suffers a permanent or partial disability due to an accident. The rider typically provides a lump sum payout or periodic payments to help cover medical expenses and loss of income resulting from the disability.
Accidental Hospitalization Rider: In the event of hospitalization due to an accident, the hospicare rider covers the medical expenses incurred during the hospital stay. It helps the policyholder manage hospitalization costs without draining their savings.
Critical Illness Rider Linked to Accident: Some life insurance plans offer a critical illness rider that provides coverage for specific critical illnesses that may arise due to an accident. This can include conditions such as traumatic brain injuries, severe burns, or spinal cord injuries.
Accident coverage works with the base term insurance policy. Here’s a step-by-step explanation:
Add-On to Base Policy: Policyholders can choose to add accident coverage as a life insurance rider to their base term insurance policy at the time of purchase or during policy renewal, depending on the insurer’s terms.
Premium Payment: Adding accident coverage usually increases the overall premium amount. The policyholder will pay this additional premium regularly (monthly, quarterly, annually) along with the base policy premium.
Claim Process in Case of Accident: If the policyholder is involved in an accident resulting in death, disability, or hospitalization, the claim process involves the following steps:
Notification: The policyholder or their family must notify the insurance company about the accident and the resulting injury or death.
Documentation: Submit required documents such as medical reports, police reports, accident reports, and other relevant proof to validate the claim.
Claim Assessment: The insurance company will assess the claim based on the submitted documents and evaluate whether the accident falls under the coverage terms.
Payout: Once the claim is approved, the insurance company disburses the benefit amount as per the rider's T&Cs.
Accidental Death: If the policyholder dies due to an accident, the beneficiaries receive both the base policy sum assured and the additional accidental death benefit sum assured.
Accidental Disability: If the policyholder suffers a permanent or partial disability, the insurer provides a payout, which can be a lump sum or periodic payments, to help cover medical expenses and loss of income.
While accident coverage can be a valuable addition to a term insurance policy, it is important to understand the eligibility criteria and exclusions:
Eligibility: Most insurers offer accident coverage riders to individuals aged 18 to 65. The coverage typically lasts until the policyholder reaches the age of 70 or the end of the policy term, whichever comes first.
Exclusions: Common exclusions may include:
Accidents occurring under the influence of alcohol or drugs.
Self-inflicted injuries or suicides.
Accidents resulting from participation in hazardous activities (e.g., extreme sports) without prior disclosure.
Injuries or death due to involvement in illegal activities.
* It is important to read the policy documents to get the clear picture of the eligibility conditions and exclusions offered under the specific plan.
Comprehensive Protection: Accident coverage ensures that policyholders and their families have comprehensive protection against various accident-related risks, including death and disability.
Affordable Add-On: Adding accident coverage to a term insurance policy is usually affordable, making it accessible to a wide range of policyholders without significantly increasing their premium burden.
Financial Security for the Family: In case of accidental death, the additional payout helps the family cope with financial challenges, covering expenses like loans, mortgages, and daily living costs.
Supplemental Income in Case of Disability: If the policyholder becomes disabled due to an accident, the rider provides financial support, ensuring they can manage medical expenses and maintain their quality of life.
Accident coverage in term insurance is an essential rider that enhances the overall protection offered by a standard term insurance policy. By providing additional benefits in the event of accidental death or disability offers policyholders peace of mind, knowing that their families will be financially secure even in unforeseen circumstances. When considering term insurance, policyholders should evaluate their needs, lifestyle, and potential risks to determine if adding accident cover is the right choice for them. With the right combination of term insurance and accident coverage, individuals can safeguard their family's future against life's uncertainties, ensuring their loved ones are protected no matter what life throws their way.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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