An accident insurance policy is one of the most essential insurance covers you need with the growing incidents of fatal road accidents, especially during nighttime. Data from the Delhi Traffic Police shows that there have been more accidents at night this year than in 2019.
Fatal road accidents have increased by around 4 per cent in the past five years, while daytime accidents decreased by a similar margin, Hindustan Times quoted special commissioner of police (traffic) Surender Singh Yadav as saying on Monday, August 7.
Before we compare the personal accident insurance coverage provided by the government and the private insurers, let's first understand what personal accident insurance is.
Personal Accident Insurance
Personal accident insurance covers both disability and death. It differs from a term insurance policy in that it only offers coverage for death and disabilities caused by accidents. On the other hand, a term policy covers the policyholder's death due to natural causes and accidents. So a personal accident insurance policy will not cover claims due to natural deaths.
What Is PMSBY—the Government-Sponsored Accident Insurance Coverage?
The government's Pradhan Mantri Suraksha Bima Yojana (PMSBY) protects the policyholder against accidental death and disability. Its annual premium is Rs 20, covering up to Rs 2 lakh in accidental death. For permanent and partial disabilities, it offers Rs 2 lakh and Rs 1 lakh, respectively. Individuals aged 18 to 70 can apply for the scheme through the official Jan Suraksha Yojana website by submitting the required forms and documents to the bank.
Although Rs 2 lakh accident coverage may seem a small amount, subscribers can club the policy with Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), which will provide additional death coverage due to natural causes besides the accident coverage, with a compensation of Rs 2 lakh. The annual premium for PMJJBY is Rs 436. So both these plans together would cost only Rs 456 annually, or Rs 1.25 per day, with a combined coverage of Rs 4 lakh.
How PMSBY Fairs With Private Insurers
Premium: Private insurers consider the applicant's occupation and the associated risk factors to determine the premium for a personal accident policy. In contrast, PMSBY charges a uniform premium of Rs 20, irrespective of occupation, making it more affordable than private insurers.
For instance, ICICI Lombard’s accident insurance premium is Rs 366 for a one-year coverage, with a sum insured of Rs 3 lakh.
Additional Benefits: With private insurance, the coverage usually extends even if the disability becomes apparent within a year after the accident. Private insurers also provide benefits like ensuring a child’s education. The coverage can be 10 per cent of the sum assured or the actual tuition fees the institution charges, whichever is lower. But this varies; for example, with the State Bank of India (SBI) General Insurance, education benefits for the insured's child and spouse are up to Rs. 50,000 or 1 per cent of the basic sum insured, whichever is lower.
Expenses for wheelchair ramps or car modifications can also be included in the coverage to adapt to a new lifestyle after an accident. However, the Rs. 2 lakh coverage under PMSBY may not cover all these costs.
Sum Insured: Private insurers offer higher sums insured. For instance, with SBI General Insurance’s Accidental insurance, the coverage for “Accidental Death Benefit or Permanent Total Disability” is 120 times the monthly gross income or 10 times the annual gross earnings from the job. The maximum sum insured is Rs. 1 crore.
Nevertheless, PMSBY is more cost-efficient and accessible to people from deprived backgrounds, especially those in high-risk occupations.