CII Certificate in Insurance - General Insurance Business (IF2) Practice Test

The sum insured in personal accident and sickness insurance is paid when the insured suffers an accident or becomes ill. This is a fundamental principle of the coverage provided by this type of insurance. Essentially, the policy is designed to provide financial protection to the insured in the event they encounter a situation where they are unable to work or suffer a loss of income due to an accident or illness.

The payment mechanism operates independently of hospitalization; while hospitalization may be a consequence of the accident or sickness, the triggering event for the payout is the occurrence of the accident or onset of the sickness itself. This means that even if the insured does not require hospital treatment, they are still entitled to receive the sum insured for the loss of income or other benefits as specified in the policy.

Other options do not align with the operational nature of personal accident and sickness insurance. For example, payments are not contingent upon retirement or the completion of the policy term; instead, they are immediate upon the qualifying event as outlined in the policy.