When it comes to personal accident insurance plans, not many people are familiar with them, compared to other types of insurance such as hospitalisation or life insurance. In this article, we will explain what personal accident insurance is for, help you assess whether you need it and, factors to consider before getting a personal accident plan.
What is personal accident insurance?
As per the name of the insurance, personal accident plans help you to cope with injuries, death and disabilities arising from accidents. This is especially useful when you get injuries that require treatment, but not serious enough to get hospitalised. In such cases when you are not hospitalised, your hospitalisation policy cannot cover you for the costs incurred for the treatment. This is when you can use the personal accident insurance for the outpatient treatment and consultation.
For instance, in case of permanent loss of a limp due because of an accident, a personal accident plan will give a lump-sum payout. In addition, medical expenses are also reimbursed to you under most personal accident plans. Claims can be made for surgical, hospital or Chinese physician expenses. The claimable amount depends on the coverage limit of your insurance policy.
It is imperative to note that personal accident plans differ from life and health insurance such that personal accident plans are to treat injuries arising from accidents, whereas life and health insurance provide coverage for death, illnesses or injuries regardless of the circumstances being natural or accidental.
Personal accident insurance’s coverage
1. Death benefits
Death caused by accidents, and not natural death
2. Permanent and/or partial disability
Permanent and/or partial disability caused by accidents
3. Income benefits
If the policyholder is gainfully employed at the time of the accident and unable to work due to the injury, the income benefits will be paid out.
4. Medical expenses
Medical expenses are normally covered by personal accident insurance.
5. Daily hospital benefits
If the policyholder is hospitalised due to an accident, daily hospital benefits will be paid out, and you do not have to be employed in order to receive these benefits.
Why do you need a personal accident plan?
Not everyone thinks they need personal accident insurance. Some people may already be covered under their company’s group insurance plan. Some occupations may require a higher level of coverage due to the nature of work.
Some people think that if you have hospitalisation insurance, personal accident plan is not required. This is incorrect as your medical expenses may not be fully covered with hospitalisation insurance alone. An accident which does not require you to be hospitalised may still require x-rays and MRI scans. Personal accident insurance can cover some or all of such expenses.
For self-employed individuals, having personal accident insurance can provide an additional layer of protection on top of their private integrated shield plan. This is due to the fact that most personal accident insurance plans provide weekly payouts (up to a certain limit) if the policyholder is unable to work due to an accident.
5 factors to consider before getting personal accident insurance
1. Personal lifestyle
Your current lifestyle greatly affects the risk level of yourself. Everyone takes a part in some form of physical activities, and physical activities always carry risks. For example, even in a simple badminton game, you may end up dislocating your shoulder if you swing your racket incorrectly. The more physically intense your lifestyle is, the more coverage of personal accident insurance you should have. One important thing to note is although getting hit in the head during a game qualifies as an accident, suffering a golf elbow from prolonged swing is not considered as an accident and you won’t be eligible to get a payout.
2. How you travel
When it comes to travelling, there are 2 points you should take note of:
- Overseas travel
- Mode of transport
If you are going overseas, it is important to take note of what is covered and what is not in case of an accident overseas. If you are going to be overseas for a long period, you should consider getting personal accident insurance that covers throughout the period you will be overseas as some plans have a duration limit for overseas travel.
In addition, the mode of transport that you take also plays a big role in the type of personal accident insurance you should purchase. For example, cycles or motorcycles are riskier than taking a car or a public transport. If necessary, you should consider personal accident plans that specifically cover riders and passengers.
3. Who truly needs the coverage?
Although the ‘personal’ accident insurance may give an impression that it is for yourself, as described above, the plan gives payouts which help with lost income during recovery. In the event of death from an accident, the payout will help your family or dependants with the financial burdens they may have. Hence, it is important to consider the standards of living and the coverage amount when buying personal accident insurance.
There are also family plans available which are especially helpful if you have children as children are more prone to accidents. Some personal accident plans come with discounted premiums for children.
4. Your occupation
Your nature of work and environment also play a great role in the amount of coverage you should have for your personal accident insurance. Accidents can occur anywhere even if your workplace is presumably safe. Different insurance companies may have different job classifications for personal accident insurance. However, generally they have the following 4 classifications:
- Low risk – clerical and administrative jobs such as clerks, office staff, authors, doctors, teachers and students
- Medium risk – Skilled or semi-skilled non-hazardous jobs and administrative work in an industrial setting such as foreman, hairstylists, photographers, waitstaff, lab workers. This also includes supervisory jobs of manual skilled work.
- High risk – Jobs that require you to operate heavy machines, manual labour and/or exposure to hazard such as carpenters, technicians, mechanics and chefs
- Very high risk – Jobs with heavy manual labour and that operate in highly hazardous conditions such as firefighters, police, woodworkers and armed security staff.
Although this is not an exhaustive list, it should give you a rough idea and that the risker your occupation is, the higher the premiums are. Some plans do not even provide coverage for the jobs in the 4th category.
5. Engage a good financial consultant
A good and experienced financial consultant can make a huge difference when it comes to servicing clients. Therefore, it is very important to find a good financial consultant who can handle your claims if there is ever a need to claim your insurance.