NISM-Series-X-B: Investment Adviser (Level 2) · Non-Life Insurance Products

Personal Accident and Disability Insurance for NISM X-B

Updated 11 October 2026 · Fact-checked

Personal accident insurance pays a fixed benefit if an accident causes death or disability. Benefits cover accidental death, permanent total, permanent partial and temporary total disability. It pays on the event, not on hospital bills. To solve questions, identify the event, match the benefit, then check exclusions.

Understand Personal Accident and Disability Insurance

Personal accident (PA) insurance is a non-life policy that pays when an accident causes death or bodily injury leading to disability. The cause must be an accident: sudden, unexpected, external and violent or visible. Illness is not covered. This is the first test in any question.

A PA policy usually has a base benefit and optional benefits. The base benefit is accidental death, paid as a percentage of the sum insured. The disability benefits are:

Permanent total disability (PTD): loss of both eyes, both limbs, or one eye and one limb, or similar total loss. Usually paid at 100% of the sum insured.
Permanent partial disability (PPD): loss of a limb, one eye, hearing or fingers. Paid at a set percentage of the sum insured, as in the policy's benefit table.
Temporary total disability (TTD): you cannot work for a period but recover. Paid as a weekly amount, often a small fraction of the sum insured, for a limited number of weeks.

PA is a benefit policy. It pays a fixed amount on the event, whatever the actual cost. Health insurance is mostly an indemnity policy. It reimburses actual medical expenses up to the sum insured. A PA policy may add small optional covers such as accident hospitalisation, child education or ambulance. Exact features differ by insurer, so read the policy wording.

Common exclusions are self-inflicted injury or suicide attempt, intoxication or drugs, war, and criminal acts. Hazardous sports and some adventure activities are often excluded unless a premium is paid. Pre-existing disability is also excluded. Premium depends mainly on the occupation risk class and the sum insured, not on age or health in the way it does for health cover.

For an adviser, PA fills a gap. Term life pays on death from any cause. It does not pay if you survive with a disability. Health cover pays bills, not lost income. PA with disability cover protects income for people whose work carries accident risk. Size the sum insured by income replacement need, and avoid overlap with riders on life policies.

Key formulas to remember

Permanent total disability payout: PTD benefit = 100% × Sum insured (as per policy); Percentages are set by each policy. Check the benefit table in the question.
Permanent partial disability payout: PPD benefit = Table percentage × Sum insured; The table percentage depends on the body part lost or impaired.
Temporary total disability payout: TTD benefit = Weekly benefit × Number of weeks of disability (up to the policy maximum); Paid only while disabled. It stops at the weekly cap or maximum weeks.
Total claim with several benefits: Total payable = Sum of the benefits, subject to the overall sum insured; Follow the policy. Death after a permanent disability claim does not usually pay twice for the same sum.
PA vs health rule: PA = fixed benefit on accident event; Health = indemnity of actual expenses; Use this to separate the two in any comparison question.

How to solve Personal Accident and Disability Insurance questions

Use the same sequence for each personal accident or disability question. It protects you from trap options.

1Check the cause. Is it an accident? If it is illness or natural causes, PA does not pay.
2Identify the outcome: death, permanent total, permanent partial or temporary total disability.
3Find the sum insured and the benefit percentage or weekly rate given in the question.
4Calculate the payout. Use percentage × sum insured, or weekly benefit × weeks within the cap.
5Check exclusions: self-injury, intoxication, war, criminal act, excluded sports, pre-existing conditions.
6Check the nature of the policy. Fixed benefit means no proof of bill amount is needed. Indemnity means actual expenses.
7Match to the client need. Income loss needs a disability benefit; medical bills need health cover.
8Choose the option that follows the policy terms, not the one that sounds most generous.

Quickest way: Four-question filter

When to use it: Use it for conceptual MCQs and short calculation questions when time is short.

Was it an accident? If no, eliminate any option that pays.
What type of loss? Name it: death, PTD, PPD or TTD.
Fixed benefit or actual cost? PA pays fixed; health pays actual.
Multiply the sum insured by the stated percentage. Then check the exclusion list.

Common mistakes in Personal Accident and Disability Insurance

Treating PA as a substitute for health insurance.
Both cover injury, so they look alike.
Fix: Remember that PA pays a fixed benefit for accident outcomes and does not cover illness. Health pays actual medical expenses.
Thinking PA pays for disease-related disability.
The word disability sounds broad.
Fix: Disability must arise from an accident. Disease-related income loss needs critical illness or other cover.
Paying temporary disability as a lump sum of the full sum insured.
Students mix up TTD with PTD.
Fix: TTD is a weekly benefit for a limited period. Only PTD normally pays 100%.
Assuming the premium depends on age and health.
Health and life premiums do work that way.
Fix: PA premium depends mainly on occupation risk and sum insured.
Ignoring exclusions when the event looks like an accident.
Students focus on the injury and skip the cause.
Fix: Check intoxication, self-harm, war, criminal acts and excluded sports before choosing the answer.
Believing term life already covers disability.
Both are protection products.
Fix: Base term cover pays on death only. Disability needs a PA policy or a rider.

Worked examples

Example 1

A client holds a personal accident policy with a sum insured of ₹50,00,000. He loses both hands in a road accident. The policy pays 100% for permanent total disability and 50% for loss of one hand. How much does the insurer pay?

Show the solution

The cause is an accident, so the policy responds.
Loss of both hands is permanent total disability.
The PTD benefit is 100% of the sum insured.
Payout = 100% × ₹50,00,000 = ₹50,00,000.

Answer: ₹50,00,000

Example 2

A PA policy has a sum insured of ₹20,00,000 and a temporary total disability benefit of 1% of the sum insured per week, for up to 52 weeks. A client is fully disabled for 10 weeks after an accident. What is the TTD benefit?

Show the solution

Weekly benefit = 1% × ₹20,00,000 = ₹20,000.
The disability lasts 10 weeks, within the 52-week limit.
Benefit = ₹20,000 × 10 = ₹2,00,000.

Answer: ₹2,00,000

Exam tips

Always test whether the event is an accident before looking at options.
Remember the contrast: PA is a benefit policy with fixed payouts, while health insurance is indemnity.
Only PTD normally pays the full sum insured. Temporary disability is weekly and capped.
Questions on suitability usually want PA for income protection against accident and health cover for medical bills.
Negative marking is 25% of the question marks, so skip a question only if you cannot narrow it to two options.

Practice questions from Non-Life Insurance Products

Personal Accident and Disability Insurance: frequently asked questions

What is the difference between personal accident and health insurance?

Personal accident pays a fixed amount when an accident causes death or disability. Health insurance reimburses actual medical expenses for illness or injury. PA does not cover illness.

What is permanent total disability in a PA policy?

It is a permanent loss that stops you from working, such as loss of both eyes or both limbs. The policy usually pays 100% of the sum insured. Check the wording for the exact definition.

What are common exclusions in a personal accident policy?

Common exclusions are self-inflicted injury, intoxication, war, criminal acts and some hazardous sports. Pre-existing disability is also excluded. Details vary by insurer.

Does term insurance cover disability?

Basic term insurance pays on death only. Disability cover needs a rider or a separate PA policy. An adviser should check for overlap before recommending both.