Personal accident insurance: what it pays for death and disability

Personal accident insurance pays a fixed amount if an accident kills you or leaves you disabled. It doesn’t look at bills. If your cover is 10 lakh rupees and an accident causes a claim the policy pays in full, your family gets 10 lakh. That makes it different from both term insurance and health insurance.

What a standard policy pays

To make policies easier to compare, IRDAI created a standard product, Saral Suraksha Bima. Its February 2021 guidelines told every general and standalone health insurer to offer it from 1 April 2021, with the same base covers and wording. IRDAI’s website still carries the guidelines and its FAQs on them. The base covers, from one shared sum insured:

• Accidental death: 100% of the sum insured.
• Permanent total disability: 100%, for example losing the sight of both eyes or the use of both hands, or an injury that stops you working at any job.
• Permanent partial disability: a fixed share from a table. Losing one entire hand or foot pays 50%. Losing a thumb pays 25%.

The death or disability must happen within 12 months of the accident. It’s paid even if the policy year has ended by then.

Optional covers cost extra and pay on top of the base sum:

• Temporary total disability: 0.2% of the base sum insured each week while an injury stops you working, if it lasts more than 4 weeks, for up to 100 weeks.
• Accident hospital bills: up to 10% of the base sum insured.
• Education grant: a one-time 10% of the base sum per dependent child in full-time study, after a death or total disability claim.

The sum insured runs from 2.5 lakh to 1 crore rupees, in steps of 50,000. Entry age is 18 to at least 70, and the policy lasts one year. Each claim-free renewal adds 5% to the base cover, up to 50%. Insurers set their own premium.

An illustration. Take a 10 lakh rupee policy with the weekly cover. An accident keeps you off work for 10 weeks. The weekly benefit is 2,000 rupees (0.2% of 10 lakh), so you get 20,000 rupees. The 4-week rule only decides whether you qualify; once you do, the whole period counts. If the same accident cost you one hand, the partial disability cover would pay 5 lakh.

How it differs from term and health cover

Term insurance pays on death from most causes, illness included, but usually nothing for a disability. Health insurance pays hospital bills, not lost income. Personal accident cover pays only when an accident is the cause, but it pays for disability, which the other two leave out. For many earners, that’s the gap: a disabling accident ends the income while the family still needs it.

Accident cover can also come as an accidental death or disability rider on a term plan. See term insurance riders for the limits IRDAI sets on those.

PMSBY: the low-cost floor

The government’s Pradhan Mantri Suraksha Bima Yojana (PMSBY) is the cheapest accident cover in India. A PIB backgrounder from April 2026 gives its terms: a premium of 20 rupees a year, auto-debited from your bank account, for 2 lakh rupees on accidental death or full disability and 1 lakh on partial disability. It’s open to savings account holders aged 18 to 70. Read PMSBY explained for how to join.

Did you know? A homemaker can be covered too. Under Saral Suraksha Bima, a family cover gives each member the full chosen sum separately, not one shared pot. More on protecting a homemaker in term insurance for homemakers.

The takeaway. Personal accident insurance is cheap protection against a narrow but serious risk: an accident that kills or disables you. It sits beside term and health cover rather than replacing them. Start with PMSBY as a floor, then size any extra cover on what your income would need to replace.

More to read: how much term cover you need, the health insurance guide, and critical illness insurance.