What if you are unable to work? Accident Disability Insurance

Rohit was driving back from Pune to Mumbai through the expressway. After crossing Lonavala, in the Ghats, the curves on the road become so sharp that sometimes you cannot see what’s around the corner.

Rohit saw the milestone. He was 70 kms away from his destination. Just then he happened to look at his speedometer, which was hovering at 70kmph. He could not help but smile at this sheer coincidence of numbers.

Rohit was crossing that part of the Ghats, which had a few consecutive turns. He crossed the first, the second as he turned into the third one he saw a huge trawler overturned, less than 100 meters away.

As a natural reaction, he pressed the brakes with all his strength, but it was too late. His car rammed straight into the trawler’s rear end and overturned.

The car’s engine was smashed, the wind shield was shattered and Rohit lay inside unconscious.

Help arrived in time and he was sent to the nearby hospital.

It wasn’t good though. Rohit suffered 7 fractures on his right leg, 3 on the hip and 2 on his right arm.

He could not move at all. It took 3 surgeries over 3 weeks to get the bones to go back to their places.

Rohit was not happy and asked the doctor, “when can I get back to work?”

“Not so soon Rohit. At least 3 months and that too in a limited way. At least 6 months before you start to work full-time”, said the doctor.

It didn’t enthuse Rohit at all. He was working on a big account and 3 months away from work would mean that someone else gets the job. Worse, he would miss out on his salary for this entire period.

After all he had EMIs to pay and other family expenses to be taken care of. His mind made some quick calculations.

Though, the car was severly damaged, the car insurance company would pay for it. The hospital expenses would be paid by the health insurance that he had started just the previous year. His health insurance cover was for just Rs. 5 lacs. It could fall short of the actual expenses and he would have to dip into his savings. But not much, hopefully.

So, no income for at least 3 months and a dip into the savings was turning out to be a double whammy.

“Could I have done something to avoid this hell?” He was frustrated with his disability.

Understanding Accident and Disability Insurance

Could Rohit have prepared himself better to handle this situation?

The answer is Yes. He could have prepared himself much better to handle the financial part of it.

The answer lies in Disability Insurance. In India, this is more commonly known as “Accident Insurance”.

Rohit was smart enough to buy a Life Insurance and a Health Insurance for himself.

His health insurance will pay the bills upto Rs. 5 lacs of Sum Insured. The car repair expenses would be paid largely by the Car Insurance.

Now, if he had only taken an Accident Disability Insurance, it would have come in handy. Here’s how.

One, it would have paid for Accident related hospitalisation. So the shortfall from the Health Insurance for paying hospital expenses could have been covered from this insurance.

Two, and this is the more important part – it would give him a weekly income.

Since, Rohit cannot move at all for 3 months, this is a case of Temporary Total Disability. Under this, the insurance company gives out a weekly payout as a consideration for the loss of income.

For example, if Rohit had a Sum Insured of Rs. 25 lacs in accident insurance, it would have given him Rs. 15,000 per week till 100 weeks (or till the time he starts earning again, whichever is less).

He could have achieved this for an annual premium of less than Rs. 5,000 (premium for Rs. 25 lacs cover).

Some insuance products give a higher payout too. For example, Rs. 10,000 per week for every Rs. 25 lacs of Sum Insured. So, if you have a Rs. 1 crore cover, the weekly income benefit would be Rs. 40,000 per week.

Yes, this may not be be enough in some cases, but it still provides for a substantial sum. And you can always opt for a cover, that will allow you to take a income benefit equivalent to your needs.

Isn’t this a great financial back up of sorts?

An accident policy brings in many more advantages. Few broad things you must understand are:

1. Accidental Death Benefit – This is the amount paid out to the nominees of the Insured in case of accident related death.
2. Accident Hospitalisation – If the accident leads to hospitalisation, the expenses towards the same are also provided.
3. Permanent Total Disability – Total loss of both limbs such as hands, legs or eyes, etc. The full Sum Insured is paid out in this case.
4. Permanent Partial Disability – Partial loss of limbs such as 1 hand, 1 leg or 1 eye, etc. Only a part of the Sum Insured is paid out in this case as defined under the policy.
5. Temporary Total Disability – As we saw in Rohit’s case. You can receive a weekly income benefit for the time you cannot go back to work.
6. Other Features – Broken Bones or Fractures, Ambulance Costs, Home modification costs because of accident, etc. are also covered under most policies subject to certain limits.

Of course, all the above payouts are subject to the maximum sum insured that you opt for before buying the policy.

The important point to understand is that an Accident Disability insurance has a key role to play in your financial planning.

Together with Life and Health Insurance, it can help you absorb a financial setback – specially related to loss of income – that is otherwise not easy to fulfil.

On a Blunt Note

Let me be a little blunt and upfront here. If you were to die, your life insurance would probably take care of your family’s financial needs.

What would they do if you were to be left incapacitated because of a dire accident? What if you were not able to work?

Remember accidents don’t happen only on roads. A slip in the bathroom could be as worse.

So, good luck to you. Hope you go ahead and add an Accident Disability insurance cover.

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Some tips about buying an Accident Disability Insurance:

• The first feature that you need to look at while evaluating a policy is the weekly income benefit.
• The payout in the weekly income benefit will not exceed your actual income.
• Usually, the maximum insurance cover that you will get is 10 times of your Gross Annual Income.
• This insurance only provides for physical disability and not mental disability.
• Do not take accident disability insurance as a rider on your life insurance policy. Buy it as a stand alone policy.

Some of the companies that offer Accident Disability Insurance are Apollo Munich, Bajaj Allianz, Religare, Bharti AXA, United India, Royal Sundaram, etc.

You can also read this article on Accident Disability Insurance to know more about what all counts as an accident and the coverage provided.