This article was written by Jackie Tan and first appeared on fundMyLife, the platform that connects financial planning questions to the right advisers.
As its name suggests, a personal accident plan helps immensely to cope with injuries, death, and disabilities – temporary or otherwise – that occur from accidents. Another advantage of personal accident plan is that it complements hospitalization plans. Sometimes, you get injuries bad enough to require treatment, but not bad enough to warrant hospitalization. If you’re not hospitalised, your hospitalisation plan is not used. That’s where the personal accident plan comes in for the out-patient treatment and consultation.
Insurance companies define “accidents” as an unforeseeable event that causes injury immediately upon incidence, with violent motion and external means involved. Despite the standard definition of what an accident constitutes, personal accident plans come in variations, each containing unique features. As such, there are a few considerations to make when purchasing this particular plan. In this article, fundMyLife lists what you have to consider before getting them.
# 1 Personal Lifestyle
The lifestyle you lead affects the risk of you getting injured. For example, do you engage in sports? Chances are that you take part in some form of physical activity. And when the “physical” in physical activity gets too intense, you may end up injuring yourself. For example, a simple soccer game may end up a broken ankle of someone tackles you the wrong way. On the other end of the physical spectrum, we have non-contact sports like golf. Heck, even playing golf – one of the safest sports around – can also result in accidents such as getting hit by a golf club. If you lead a physically intense lifestyle, you might want to consider more coverage.
Important note: getting hit in the head during a game constitutes an accident, but suffering a golf elbow from prolonged swings does not qualify for a payout since it is not an accident that you got golf elbow.
# 2 How You Travel
Since it’s a point about travel, we decided to lump two (similar) things together:
- Overseas travel
- Mode of transport
If you’re going overseas, make sure you look through the fine print to see what you are and are not qualified for if you get into an accident overseas. If you also find yourself travelling often and/or for a long time, it is important to consider plans that have a cover period long enough for your travel duration. This is because some plans have a duration limit for overseas travel.
You should consider plans that suit your mode of transport in your daily travel. Motorcycles, cycling, and personal mobility devices are riskier than, say, driving a car or taking a public transport (train breakdowns notwithstanding). There are specific plans out there that cover riders and passengers.
# 3 Who You Are Truly Buying It For
While the ‘personal’ in personal accident plan implies that it’s just for yourself, as mentioned the plan helps with lost income during recovery. In the worst case scenario, where you die from the accident, the lump sum payment will tide your family over (assuming you’ve dependents). As such, it’s important to factor in the amount and current standard of living when deciding coverage amount.
Some plans also allow you to purchase family plans. If you have a family, you should consider getting a personal accident plan that can cover your children since children can get into accidents quite easily. There are personal accident plans that come with discounted premiums for your children.
# 4 Type Of Occupation
Due to the nature of work and location, your occupation carries a certain level of risk. Even if you work in an office where everything is presumably safe, you still can get into an accident. However, not all occupations are the same. Insurance companies’ plans have their respective classifications, but these classifications follow very similar guidelines. In general, there are four categories of occupations:
- [Low risk] Persons in clerical and administrative jobs. Example: clerks, office staff, authors, doctors, teachers, students.
- [Medium risk] Persons in skilled or semi-skilled non-hazardous work and administrative work in an industrial setting. Also includes supervisory jobs of manual skilled work. Example: foreman, hairstylists, photographers, waitstaff, lab workers.
- [High risk] Persons engaged in jobs that requires heavy machines, manual labor, and/or exposure to hazard. Example: carpenter, technicians, mechanics, chefs.
- [Very high risk] Persons engaged in jobs with heavy manual labor and highly hazardous conditions. Example: firefighters, police, woodworkers, armed security staff.
Bear in mind that our list is not exhaustive, but it means to give you a rough idea of the occupational categories. As such, bear in mind that your occupation will affect your premiums. In general, the riskier the job the higher the premiums. Some plans even have exclusions for occupations in the fourth category.
Bonus fact: Personal accident plans do not cover repetitive motion injury due to, well, repetitive motion in the office. In addition, getting a bad back due to poor seating ergonomics is not covered either so get a good chair!
# 5 Person Servicing The Personal Accident Plan
A good claims experience makes a huge difference. It is between feeling a hole in your pocket for a long time in uncertainty, or stepping out of the doctor’s office confident that you don’t have to worry about money. As such, it is important to find a good financial services representative who can handle your claims when the time comes (hopefully never). However, given how low the premiums are, sometimes insurance company representatives relationship managers, or even your own financial advisers can be quite unmotivated to service you if their heart is not in the right place.
Hence, it is crucial to find someone trust who has your back whenever and wherever you are. You should consider engaging someone from a pool of highly curated financial advisers.
Conclusion
That’s all folks. We hope the article helped in shedding light on factors to consider when buying a personal accident plan. It takes only one accident to burn a hole in your wallet so be prepared always!
Still confused? If you have any burning questions to ask about financial planning, head on to our main site and ask our credible and incredible pool of financial advisers!
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