Personal accident insurance is a crucial safeguard against unforeseen events, but choosing the right policy requires careful attention. Many buyers overlook key details, resulting in insufficient coverage or unexpected exclusions. Here are the top 5 mistakes to avoid when purchasing personal accident insurance:
1. Underestimating the Coverage Amount
One of the most common mistakes is opting for a policy with a low sum insured, thinking it will suffice in case of an accident. Many people underestimate the financial implications of accidents, especially those involving serious injuries or permanent disabilities. Medical expenses, rehabilitation costs, and lost income can accumulate quickly, leaving you underinsured if the coverage is too low.
What to do: Evaluate your lifestyle, income, and financial responsibilities before selecting the coverage amount. Consider factors like:
- Potential medical costs
- Your family’s living expenses
- Loan or mortgage repayments Choose a sum insured that will adequately support you and your dependents during recovery or in the event of permanent disability.
2. Not Understanding Policy Exclusions
A major pitfall is failing to read and understand the exclusions in your personal accident insurance policy. Every policy has specific scenarios it doesn’t cover, such as injuries from high-risk activities (e.g., adventure sports) or self-inflicted injuries. If you don’t take the time to review these, you could end up with a policy that doesn’t cover accidents related to your hobbies or profession.
What to do: Go through the policy’s fine print carefully and ask your insurer about any exclusions that might affect you. If you engage in high-risk activities, you may need to look for a policy that includes optional riders to cover such risks.
3. Overlooking Permanent and Partial Disability Benefits
Many people focus solely on death benefits, overlooking the importance of coverage for permanent or partial disabilities. However, these are more common outcomes of accidents, and they can severely impact your ability to work and earn a living. A policy that doesn’t include comprehensive disability coverage could leave you financially vulnerable.
What to do: Ensure that the policy provides adequate benefits for both permanent total disability (PTD) and partial disability. Check the percentage of the sum insured paid for different levels of disability and how this compares across different policies.
4. Assuming Employer-Provided Coverage Is Enough
Some individuals rely solely on the personal accident insurance provided by their employer, assuming it offers adequate protection. While employer-provided coverage is a valuable benefit, it often comes with lower limits and fewer benefits compared to a standalone policy. Moreover, this coverage may end when you change jobs or retire.
What to do: Review your employer’s policy and compare it with individual accident insurance plans. If the coverage is insufficient, consider purchasing a supplemental personal accident policy to fill the gaps.
5. Ignoring Optional Riders That Can Enhance Your Coverage
Many buyers skip adding optional riders to their base policy, either due to cost concerns or lack of awareness. However, riders like hospital daily cash, ambulance charges, or education benefits for children can significantly enhance the scope of your coverage. These can make a big difference when dealing with the financial consequences of an accident.
What to do: Review the riders available with your policy and assess their relevance to your lifestyle and needs. For instance, if you have children, an education rider can cover their school fees if you’re disabled. While riders may increase your premium, they can also offer valuable benefits in the long run.
