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Personal Accident Insurance Plan – Types, Coverage & Taxation

Written by - Akshatha Sajumon

February 5, 2022 4 minutes

Personal Accident Insurance plan provides complete financial protection to the policyholders against unseen instances such as accidental death, accidental bodily injuries, and partial/total disabilities, permanent as well as temporary disabilities resulting from an accident.
In the case of accidental death of the policyholder, the nominee gets 100% compensation from the insurance company. There are additional compensations that are offered for accidental disability, such as loss of eyes, limbs, and speech.
Accidents can happen anytime, anywhere, and may result in minor to severe injuries or lead to death. Such uncertainty may lead to a financial crisis. Accidental Insurance policies act as a guard and protect from such uncertainties. It provides the necessary financial assistance to you and your family against accidental death, bodily injuries, and disabilities (Partial/ Permanent/Temporary). There are various other benefits such as accidental hospitalization cover, Hospital Confinement Allowance, and Medical Expense Cover.

Types of Personal Accident Insurance Policy:

Accidental Insurance Policies are of two types:

1. Individual Accident Insurance:
This policy covers an individual in case of any accidental damage. It also covers accidental death, loss of limbs or sight, or other permanent disabilities resulting due to an accident.

2. Group Accident Insurance:
Group Accident Insurance is taken by employers to get coverage for their employees. Depending on the group size, some insurance companies also provided a discount on the premium. It is a good option for small organizations as it is available at a low cost.

Here are a few other parameters to consider:

  • Personal Accident Insurance Coverage

Policy Holders can avail the following coverage benefits with an accident insurance policy.

  • Accidental Death Cover

An accident can devastate the dependent family members, both emotionally and financially. If personal injuries result in the death of the policyholder, the entire cover value is paid to the nominee, as mentioned in the policy document.

  • Permanent/Total Disability Cover

When an accident results in permanent disabilities or lifelong total impairment (loss of both the limbs), then a specified cover amount will be paid to the policyholder.

  • Permanent Partial Disability Cover

In case of physical damage to a policyholder body (bodily injuries), resulting in permanent or partial disabilities, then a certain percentage (up to 100%) of the benefit is paid to the insured.

  • Temporary Total Disability

If the policyholder faces temporary disabilities and is bedridden, then the insurance company will provide a weekly allowance to recompense the loss of income. The policyholder can also utilize this claim amount to pay the EMIs, in case there is a loss of earnings.

Inclusions of the personal accident plan:

  1. All damages or injuries caused by accidents.
  2. Includes death or disability caused due to rail, road or air accidents, burning, drowning, snake bite, gas accidents, etc
  3. Medical expenses and treatment for everyday injuries
  4. Hospitalization and similar fees
  5. Education costs for children of policyholder, in case of death or complete disability
  6. Corrective surgery cost
  7. Funeral expenses of the policyholder
  8. Double indemnity for death or permanent disability while using public transport

Exclusions of the plan:

  1. Childbirth or pregnancy
  2. Suicides or any self-injuries
  3. Non-allopathic treatments are not covered.
  4. Participating in naval. Military, air force, or any sports activities.
  5. Pre-existing disability or injuries
  6. Accidents caused due to intoxication like drugs and alcohol
  7. Committing a criminal act or suffering from a mental disorder

Difference between Accidental Insurance and Life Insurance

VariablesAccidental insuranceLife insurance
Death coverOffers compensation only in case of death of the policyholder.Provides financial benefit irrespective of the reason of death apart from suicide
Coverage conditionsCovers if the policyholder dies within a specified  period after the accidentCovers if the policyholder dies before or after the illness
Plan optionsOnly covers loss or damage due to accidentsRetirement solutions, death cover, long or short-term investment goals
Partial disabilityCoveredNot covered

How much coverage is needed?

It can be 100 times of your monthly income. For example, if your current earnings are Rs. 10,000/- them you can buy a cover of Rs. 10 Lakhs.


Section 80D of the Income Tax Act 1961 does not provide any tax benefit for the premium paid for personal accident insurance plans that offer protection against any physical disability, dismemberment or accidental demise. However, it is essential to understand that the primary reason for buying any insurance is protection and safety. Tax considerations should never drive insurance decisions.

Takeaways of the plan

1. Provides family security
2. Both individual and family plans are available
3. 24*7 services
4. Easy claim process
5. Coverage at low premiums

You can secure yourself against accidental death and disability with personal accident insurance. Choose the best plan and save medical expenses. For Mahatma Gandhi once said…

“It is health that is real wealth and not pieces of gold or silver.”

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