Personal Accident with Life Insurance or as Stand-alone. Which One is Better?


Personal Accident with Life Insurance or as Stand-alone. Which One is Better?

A personal accident policy is designed to provide compensation to the insured in case of bodily injury, such as disability and death arising out of accidental means. It would usually cover death and various forms of disability such as permanent total disability, permanent partial disability, temporary total disability and temporary partial disability. Even though the policy is intended to cover all forms of disabilities, it can be customized by the insurance companies as per the needs of their customers. A personal accident policy is the most commonly offered insurance plan with loans, bank accounts, etc. It can be taken either as a stand-alone policy or as an add-on in life insurance or health insurance plans. Health insurance companies provide personal accident coverage in addition to the treatment for medical expenses.

Personal accident provides compensation in case of an accident caused by any violent, visible and external means resulting in death or disability of the insured. The accident is an unfortunate and unintentional event resulting in bodily injury to the policyholder. Personal accidents don’t cover death or disability due to natural means. However, it covers all kinds of accident-related events leading to death and disability.

Personal accident sum insured is known as capital sum insured as it’s part of the basic sum insured. Capital sum insured is the maximum sum insured under the policy. The entire sum insured would be paid in case of death of the policyholder, and the partial sum insured would be paid in case of disability of the policyholder. The amount of sum insured to be paid in case of disability, in turn, depends on the nature and type of disability.

Personal accident policies should first be understood before deciding how to take them, as the requirements might vary from one person to another.

Here is a Brief Explanation of the Coverage Under Personal Accident Plans.


Personal Accident policy compensates the nominees of the policyholder in case of death of the policyholder due to an accident. The nominee is entitled to receive the entire sum insured in case of the death of the policyholder. Death due to any accident is covered under the policy, with the exception of natural causes. The death benefit would be payable, and the policy would be discontinued after that.

Permanent Total Disability:

Permanent total disability is a combination of permanent and complete disability. A disability is classified as permanent when the damaged body part cannot grow back. This kind of disability is lifelong, and the insured would be unable to carry out regular tasks due to the disability. PTD may even cause the insured to lose their livelihood in some cases. Total disability is when the intended part of performing regular functioning is totally gone and beyond repair. Examples of permanent total disability are loss of both limbs, eyes, loss of eyesight, paralysis, etc. Permanent total disability is the second most severe risk after death and, therefore, has the next highest claim payout. The percentages of payout in permanent total disability can sometimes exceed the sum insured depending on the terms and conditions of the policy. For example, a Personal accident policy may mention that 2X the sum insured would be paid as the claim amount in the case of PTD, in which the insured would get double the sum insured as the claim amount.

Permanent Partial Disability:

Permanent partial disability is the next severe type of disability after permanent total disability. In this, the disability is permanent, i.e., irrévocable in nature but partial. PPD is also lifelong, as the lost parts cannot be regrown by the insured. Partial disability means that the insured would be disabled only to a certain extent, i.e., partially and not completely. Permanent partial disability ensures that the insured is unable to perform their regular duties in the same manner as they could before the accident. Loss of one limb, one eye, one ear hearing capacity, etc, would be treated as permanent partial disability and compensation under the policy varies accordingly.

Temporary Total Disability:

Temporary total disability, as the name suggests, is the total disability which is temporary in nature. Insured policyholders would be disabled completely, but only for a certain period of time. Temporary total disability could be temporary paralysis where the insured would not be able to perform regular duties temporarily. Compensation in case of temporary total disability is given only for a certain period of time, as mentioned in the policy schedule. Most of the insurance companies offer compensation under TTD for up to 52 weeks or till the recovery, whichever is earlier. Under TTD, the insured would be provided with weekly compensation up to a certain number of weeks.

Temporary Partial Disability:

Temporary partial disability refers to a disability which is partial and temporary in nature. Temporary partial disability includes fracture of hand, leg or breaking bones, etc. Temporary partial disability facility is given only if the disability is temporary and partial in nature and the compensation payable is on a lump sum basis.

Personal Accident with Life Insurance (As an add-on) or as a Stand-alone policy:

A detailed comparison explaining the advantages and disadvantages of taking a personal accident policy with life insurance or as a stand-alone is explained below:

FeatureAs an Add-on (In Life Insurance)As a Stand-alone Policy
Accidental DeathCovered Covered
Permanent Total DisabilityCoveredCovered
Permanent Partial DisabilityMay be coveredCovered
Temporary Total DisabilityNot coveredCovered
Temporary Partial DisabilityNot coveredCovered
Other benefits such as Transportation of mortal remains, Child education benefit, Hospital allowance, Medical expenses due to an accidental injuryNot coveredCovered
Sum Insured SelectionBased on the life insurance sum assured. Cannot be more than the life insurance sum assured. It is usually 50% of the life insurance sum assured. Sum insured can be selected as per the needs and requirements of the insured. No limits on sum insured. Maximum sum insured depends on the income earning capacity of an individual. 
EligibilitySame conditions as that of life insurance applied to the add-onMinimum Age- 18 yearsMaximum Age- 65 years or Above (Varies from one company to another)
Policy PeriodSame as that of the life insurance policy. 1 year, 2 Years or 3 years.
Premium paying TermSame as that of the life insurance planEvery year or lump sum for 2/3 years in case of long term plans
Cumulative BonusNot available Available
Renewal As per the life insurance renewal terms and conditionsYearly

The main difference between a personal accident policy as an add-on and a stand-alone policy is the availability of temporary disability benefits. Now, let us assume a situation where an individual is paralyzed or bedridden due to an accident. In this situation, the medical expenses incurred by the insured would be covered under the health insurance policy, but what about the loss of earnings? Since the individual is bedridden, he/she cannot attend their regular duties to earn a living, and there would be no coverage for this situation in any of the insurance plans except for personal accident plans.

A personal accident plan would cover temporary total disability (TTD) by providing weekly compensation to the insured for a certain number of weeks. TTD is mostly available in stand-alone personal accident insurance plans, and one should make sure to include it while taking personal accident coverage. The decision to purchase a personal accident policy should be taken after considering the coverage expected and required by an individual.

For more details on personal accident plans, please visit Ethika Insurance Broking and talk to our insurance experts.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Management.