Standalone personal Accident cover or Accident Rider- What to Choose?

Rahul, a regular reader of Good Moneying, asked us the question- I already have an accident and disability rider in my life insurance plan, and even some coverage of this sort has been provided by my employer too, then what’s the use of buying a separate personal accident cover? 

This is a valid question. Accident and Disability riders are optional covers that almost all life insurance policies offer along with the basic life cover. And if you go only by the name then definitely this confusion will crop up as to why to buy a separate individual personal accident policy? Wouldn’t the rider cover be enough? What extra will the separate policy provide?  

This is where you need to understand that Disability is more dangerous than death. To manage the financial difficulties that will come along with in case of an eventuality, you need to be fully insured. Rider cover depends on the base life cover, and may not be adequate. Moreover, the riders many times do not offer cover against temporary disabilities, which is important and acts as Income Protection.

Below is the point-by-point comparison.

Standalone Personal Accident Cover vs Accident Rider:

#1 Wider Scope of Cover:  

The accident rider generally covers only death or permanent disability whether partial or total, resulting from an accident. 

On the other hand, a standalone personal accident plan is an independent plan and has a wider scope of coverage. It covers-

1. Accidental Death
2. Permanent Partial Disability
3. Permanent Total Disability
4. Temporary Total Disability 

In addition, some policies also cover expenses like- ambulance charges, funeral expenses, education of dependent children, EMI support, etc. These features may not be available in the accident rider with a life or health plan.

#2 Higher Sum Insured:

The sum insured in case of the accident rider is limited. It is usually dependent upon the underlying life insurance cover. In some policies, it is a fixed amount paid by the insurer in case of accidental death or disability. In addition, once you surrender your life cover or the policy is matured, the rider would no longer be available. 

On the other hand, a standalone personal accident cover provides a higher sum assured, which typically is 10-20 times the annual income. The amount of cover depends upon the income and work profile of the individual.

If you are seriously considering the risk coverage then only a Standalone policy will provide that much-required cover. 

#3 Flexibility:

The accident rider does not allow any customization. It generally pays the fixed amount as defined in the policy wordings when the event gets triggered.

On the other hand, the standalone personal accident cover offers flexibility in choosing the required sum insured, and other customizations as per your requirements. For example, if your work profile is such that it is more prone to accidental injuries, you can choose a higher amount of coverage.

(Read: Why Personal Accident Cover plays an important role in your protection planning?)

Conclusion:

Accidents can happen anytime, anywhere. So, it is wise to have a standalone personal accident cover of adequate sum assured for comprehensive coverage against death or disability arising out of the accident, rather than opting for an accident rider.

This would not only help in covering the unforeseen medical as well as other expenses in the event of disability but to some extent will help in the protection of income too. Thus, ensuring the financial security of the family.

Your protection planning is not complete without a separate comprehensive personal accident cover for each of the family members. It becomes more important if your work profile is more prone to accidents.

Yes, the premium would be higher as compared to the accident rider but it is imperative to do a cost-benefit analysis and decide accordingly which option to choose.