How Much Personal Accident Cover Do You Actually Need?

Ask yourself one number before you shop. How many rupees would stop arriving every month if you could never work again? That figure, and not the premium, is what decides how much personal accident cover you should buy.

Most people buy this policy backwards. They start from a premium that feels comfortable, take whatever cover that premium happens to buy, and never test the result against their own salary slip.

Step 1: five questions that give you a number

Take a pen. Each answer feeds the next.

  1. What is your annual take home income? Use what reaches your bank account in a year, not the cost to company. If self employed, average your last three assessment years.
  2. How many earning years are left? Subtract your age from the age you expect to stop working. A 34 year old planning to work till 60 has 26 years left.
  3. What do you still owe? Add the outstanding principal on home, vehicle, education and business loans.
  4. What accident cover do you already hold? Count employer group cover, any accident benefit inside a motor policy, and any government or welfare board benefit you are enrolled in.
  5. Do the arithmetic. Income multiplied by earning years left is your gross loss of earning capacity. Add the loans. Subtract cover already held. What is left is your gap.

This is a rule of thumb, not a rule. No IRDAI regulation or circular tells you how much personal accident cover to buy. The method above is planning arithmetic, nothing more. A widely used planning benchmark is ten to fifteen times annual income, trimmed to what an insurer will underwrite. Expect to be asked for income proof, and expect a ceiling.

Step 2: test it against a worked example

Illustrative only. Every rupee figure below is invented to show the method.

Devendra Sonawane, 34, runs a two person CAD drafting studio in Nashik.

  • Annual take home income: ₹9,00,000
  • Earning years left to 60: 26
  • Gross loss of earning capacity: 9,00,000 x 26 = ₹2,34,00,000
  • Home loan outstanding: ₹18,00,000
  • Cover already held: nil, because he has no employer

An insurer is very unlikely to hand a ₹9 lakh earner ₹2.5 crore of accident cover. So he works down. Fifteen times income is ₹1,35,00,000, and the underwriting ceiling against his income proof lands lower still. He buys the largest sum insured on offer, adds the temporary total disablement option, and treats the rest of the gap as a reason to hold an emergency fund. The worksheet is not there to hit a theoretical number. It is there to stop you buying ₹5 lakh by reflex.

Step 3: know what the four benefit heads pay

Personal accident is a benefit policy. It pays a stated sum on a stated event, not your hospital bill. Four heads matter.

Benefit head What triggers it How it is normally shaped
Accidental death Death from injury in an accident during the policy period Full sum insured, usually only if death occurs within 12 months of the accident
Permanent total disablement Injury that permanently stops you working, or a listed catastrophic loss such as sight of both eyes or use of both hands Full sum insured, again on a 12 month link to the accident
Permanent partial disablement A listed permanent loss, such as one hand, one foot, sight of one eye, fingers or toes A fixed percentage of the sum insured per listed loss, on a published scale
Temporary total disablement Injury that keeps you off work for a while, then you recover Weekly cash while you cannot work, capped by weeks and by the sum insured

That shape is not invented. It is the construct IRDAI set out in its 2021 standard personal accident guidelines, where the first three heads were base covers sharing one sum insured, and temporary total disablement, hospitalisation expenses due to accident and an education grant for dependent children were optional add ons. The weekly disability income a working person most needs was an optional cover, not a base one. If you do not ask for it, you may not have it.

Step 4: what changed in 2024, which most articles missed

From 1 April 2021 every general and standalone health insurer had to offer one identical standard personal accident product, Saral Suraksha Bima, under guidelines IRDA/HLT/GDL/MISC/036/02/2021 dated 25 February 2021, modified on 23 March 2021.

Both stand superseded. IRDAI's Master Circular on Health Insurance Business, Ref IRDAI/HLT/CIR/PRO/84/5/2024 dated 29 May 2024, says at paragraph IV that it supersedes every guideline and circular in its Annexure-6. Item 25 of that list is the Saral Suraksha Bima guidelines by name. Item 29 is the March 2021 modification. The 2024 master circular carries no standard personal accident mandate forward.

For a buyer that means three things:

  • Under the 2024 framework no rule forces every insurer to sell one common personal accident product. Do not assume uniformity.
  • Products filed under that template did not vanish. Insurers were told to bring non compliant products in line on or before 30 September 2024 under the same unique identification number, so policies shaped like the old standard are still sold.
  • The comparison work is now yours. Two similar sounding policies can differ on the disablement scale, on whether weekly disability income is included, and on age limits.

This was part of a wider clean up. IRDAI's Master Circular on General Insurance Business repealed the guidelines for Bharat Griha Raksha and for Bharat Sookshma and Laghu Udyam Suraksha by name in its list of repealed circulars.

Step 5: why term life and health cover do not replace it

Policy Pays when What it does not do
Term life You die, from almost any cause Nothing if you survive an accident but can never work again
Health indemnity You are hospitalised, against actual bills Pays the hospital, not your household. Stops at discharge
Personal accident Accidental death, accident caused disability, or time off work after an accident Ignores illness. A heart attack or cancer is not an accident

Only personal accident cover fills the middle gap. A spinal injury that ends a career costs a family more than a death would, because the household loses the income and keeps the person to care for. Term life pays nothing. A health policy pays the surgeon and stops.

There is a second reason worth real money. IRDAI told motor insurers in circular Ref IRDAI/NL/CIR/MOTP/200/12/2018 dated 11 December 2018 that if an owner driver already holds a 24 hour personal accident cover against death and permanent disability, total and partial, for a capital sum insured of at least ₹15 lakh, no separate compulsory personal accident cover need be taken. That circular also allowed a standalone compulsory cover from 1 January 2019, running one year and covering every vehicle the owner driver owns. It sits in the annexure of court ordered circulars that the 2024 General Insurance master circular keeps in force. Check your motor policy so you are not paying twice.

Step 6: the exclusions that actually bite

The withdrawn 2021 template carried an exclusion list that most wordings still echo. Check your own schedule against it rather than assuming.

  • Self inflicted injury, suicide or attempted suicide, with a carve out for self injury in self defence or to save a life.
  • Under the influence of liquor, drugs or other intoxicants, excepting cases where the insured was not directly responsible for the accident despite being intoxicated. That exception is what to look for.
  • Breach of law with criminal intent, and loss from committing or wilfully participating in an illegal act.
  • Professional participation in hazardous or adventure sport, listing para jumping, rock climbing, mountaineering, rafting, motor racing, horse racing, scuba diving, hang gliding, sky diving and deep sea diving.
  • Flying other than as a passenger on a licensed aircraft.
  • War, invasion, civil war, mutiny, seizure and detainment, and nuclear, chemical or biological events.

Two structural limits matter as much. The policy does not cover illness at all, and disability benefits are normally tied to the disablement arising within 12 months of the accident.

Step 7: the pre purchase checklist

Keep these ready before you open the proposal form.

  • Income proof. Recent salary slips and Form 16, or the last three years of income tax return acknowledgements if you are self employed.
  • Photo identity and address proof.
  • Nominee details, with full name, date of birth and relationship to you.
  • Your bank account details. The 2024 policyholder protection regulations require the insurer to collect these at proposal stage so refunds and claims can be paid electronically.
  • Policy numbers of accident cover you already hold, so you size the top up and not a duplicate.
  • Your exact occupation and daily duties, written in your own words before anyone else describes them for you.

Then work down this list.

  1. Check the intermediary is licensed on the IRDAI register before you pay anyone.
  2. Fill the proposal form yourself, honestly. Under the IRDAI policyholder protection regulations of 2024, a proposal for any class of insurance must be evidenced by a proposal form, and the duty to disclose material information runs both ways.
  3. Declare your occupation accurately. Pricing turns on what you do all day, and a misdescribed occupation is the cleanest ground an insurer has to contest a claim.
  4. Get nominee details onto the schedule. Those regulations require general and health insurers to obtain nomination when a new policy is issued and again at renewal, with no fee for registering it at inception.
  5. Ask in writing whether temporary total disablement is included or optional, and what the weekly rate and cap are.
  6. Read the Customer Information Sheet. IRDAI's 2024 health master circular requires a CIS in a set format with every policy, explaining the basic features in plain words.
  7. Use the free look if the document does not match the pitch. The 2024 regulations give 30 days from receipt of the policy document, electronic or otherwise, for life and new individual health insurance policies of a year or more. Return it without a claim and the refund is the premium less a proportionate risk premium for days on cover, any medical examination cost and stamp duty, payable within 7 days.

Mistakes that cost people money

  • Buying the sum insured that matches a premium you had in mind. Run the worksheet first.
  • Assuming group cover travels with you. Employer accident cover usually ends with the job.
  • Assuming this renews like a health policy. The IRDAI Insurance Products Regulations, 2024 put guaranteed renewability, migration and portability inside the health insurance schedule, then expressly exclude personal accident and travel policies from all three.
  • Letting it lapse. The grace period under those regulations is fifteen days where the premium mode is monthly and thirty days in all other cases.
  • Never telling the family the policy exists. Keep the policy number, insurer helpline and nominee papers where someone else can find them.

FAQ

Is Saral Suraksha Bima still compulsory for insurers to offer in 2026?

No. The guidelines that mandated it, IRDA/HLT/GDL/MISC/036/02/2021 dated 25 February 2021, appear at item 25 of Annexure-6 to IRDAI's Master Circular on Health Insurance Business dated 29 May 2024, which supersedes everything in that annexure. The March 2021 modification is item 29. Products built on that template may still be sold, but no rule now requires every insurer to offer one.

How much personal accident cover is enough?

There is no regulated answer. Take annual income multiplied by the earning years left, add outstanding loans, subtract cover you already hold, and buy the largest sum insured the insurer will underwrite against that gap. Ten to fifteen times annual income is a common planning benchmark, and a rule of thumb only.

Does a personal accident policy cover a heart attack or a stroke?

No. These policies respond to injury caused by an accident. Illness, however sudden, is not an accident. That is what health insurance and critical illness cover are for.

What is the free look period on a personal accident policy?

The IRDAI policyholder protection regulations of 2024 give 30 days from receipt of the policy document, electronic or otherwise, for life and new individual health insurance policies, except those with a tenure under a year. Personal accident sits inside the health insurance schedule of the Insurance Products Regulations, 2024. If unsure, ask the insurer to confirm your free look days in writing before you buy.

I already have compulsory personal accident cover on my car policy. Do I need more?

Usually yes, because that cover is built around the owner driver at a fixed capital sum insured. The rule runs the other way too. IRDAI's circular of 11 December 2018 says that if you already hold a 24 hour cover against death and permanent disability, total and partial, of at least ₹15 lakh, no separate compulsory personal accident cover need be taken.

Can the insurer refuse to renew my personal accident policy?

Guaranteed renewability, migration and portability under the IRDAI Insurance Products Regulations, 2024 apply to health insurance policies but expressly exclude personal accident and travel policies. That guarantee does not carry over, so ask about renewal practice before you commit.

What if the claim later gets stuck on police or hospital paperwork?

That is a documents problem, and it is where the Right to Information Act earns its keep. The FIR copy, post mortem report, inquest papers, disability certificate and government hospital record are all held by public authorities. Our guide to accident claims rejected over FIR and post mortem gaps covers the dispute itself. To pull the papers, draft with the AI RTI Drafter and track the clock on the Timeline Tracker under the RTI Act, 2005.

Sources

Written for RTI Wiki by Dr. Shrawan Kumar Pathak. Regulatory position checked against IRDAI primary documents on 6 August 2026. Insurance is a contract. Read your own policy schedule before you rely on any general description.

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