Personal Accident Insurance: Should You Get It?
The thing about accidents is that they are unexpected, unpredictable, and often can be financially draining. The consequences of an unfortunate accident can be dramatically life changing, not just for you but also for your family.
Ask yourself: Will your death or disablement due to a serious accident leave your family in financial dire straits?
If you are the sole breadwinner, or you contribute significantly to your family, the answer is most likely a yes.
This makes a personal accident (PA) insurance plan a must for you and your family. PA insurance undertakes the negative financial effect of the accidents and provide for you and your family, when you need it the most.
What is personal accident insurance?
Personal accident insurance is an annual policy which provides compensation in the event of injuries, disability or death caused solely by violent, accidental, external and visible events. The definitions for violent, accidental, external and visible events vary from insurer to insurer.
Different PA policies offer different coverage and scale of benefits. Typically, the standard types of coverage provided include: accidental death, permanent disablement, temporary total or partial disablement, medical expenses, corrective surgery, hospitalisation benefits and funeral expenses.
The plan is designed to pay out if you are severely injured or die in an accident, where policyholders receive a tax-free lump sum in the unfortunate events that are included in the policy.
What’s the difference?
If you already have life insurance and a medical and health insurance policies, do you still need PA?
It depends. In all honesty, there are some of us who need it and some of us who are lucky enough to never need it. But then, how will you ever know? Accidents do not happen while announcing themselves, they just happen.
The difference between PA insurance and life insurance or medical and health insurance, is the cause of injury or death. PA insurance does not cover injury or death due to natural causes, such as illnesses like life insurance does. In the same way, life insurance doesn’t cover for accidents that do not result in death.
This is why a personal accident policy works as a supplement to life insurance. To protect you and your family in the event of an accident that renders you unable to generate income or worse, causes your death. This is why it’s a good idea to have both PA and life insurance – to cover your loved ones no matter what happens.
PA and life insurances cover you in these instances but if you’re injured severely, you’ll still need medical and health insurance to take care of the medical bills for treatments that are required.
What are the coverage and exclusion terms?
The scope of cover and scale of benefits differ from insurer to insurer. Therefore, it is important to read the fine print before purchasing a policy to ensure that it meets your requirements.
The types of coverage provided under a PA policy normally include:
There are also some exclusions. Death, disability or injury caused by the following events is commonly excluded from the cover:
For those involved in certain hazardous occupations like law enforcement officers, divers, pilots or crew members, aircraft testers, racing drivers, fishermen, or high risk recreational persons who take part in bungee jumping, rock climbing and sky diving, may not be able to obtain a PA cover. It is best to check with the insurer or the agent on these exclusions before proceeding.
If you have more than one PA policy, you or your beneficiary will be compensated upon your death or disablement. However, certain claims like medical expenses can only be made from one PA policy. If the medical expenses is more than the sum assured, you may claim the difference from the second PA policy.
Personal accident cover isn’t a substitute for life insurance, but it can provide a financial safety net for you and your family if you are met with an unfortunate accident that results in your injury, disability or death. It should definitely be used in conjunction with life insurance to be completely secured.
Just like any other insurance products, terms of compensation and definitions vary from insurer to insurer, hence, it becomes necessary for a prospective customer to read and understand the offerings by various insurers, along with the policy exclusions, before purchasing a plan that meets their needs.