When compared to other insurance types such as life and critical illness policies, personal accident plans are generally less well understood by consumers.
In this article, we will explain what exactly personal accident plans are, and how they help give us added protection in our lives.
What Are Personal Accident Plans?
Simply put, personal accident plans are a type of general insurance that provides policyholders with financial support in the event of an unfortunate accident occurring. Payouts are either in the form of a reimbursement basis, based on medical expenses incurred, or a lump-sum payout, depending on the type of injuries sustained.
For example, in the event of a permanent loss of a limp due to an accident, a personal accident plan will provide the policyholder with a lump-sum payout.
Beyond permanent injuries sustained, medical expenses are also covered under most personal accident plans on a reimbursement basis. The total amount that is claimable depends on the coverage limit. Expenses that can be claimed from include surgical, hospital or even Chinese physician expenses.
It’s important to note that personal accident plans differ from life and health insurance as coverage provided is only meant for injuries and treatments which arises due to an accident. This is in contrast to life and health insurance, which provides coverage regardless of the circumstances which lead to death, illness or injuries, be it accidental or natural.
This is why personal accident plans are usually regarded as a useful complement to other existing insurance policies that a person may already have, and not a substitute.
Coverage Provided By Personal Accident Plans
In general, here are the types of coverage that you can get from a personal accident plan.
# 1 Death Benefit
This refers to accidental death, and not natural death.
# 2 Permanent & Partial Disability
Similar to death benefit, this is payable if caused by an accident.
# 3 Income Benefit
This is payable if the policyholder is 1) gainfully employed at the time of the injury and 2) unable to work due to the injury. Benefit are usually paid on a weekly basis.
# 4 Medical Expenses
Most personal accident plans will cover medical expenses incurred up to a certain limit.
# 5 Daily Hospital Benefit
This is payable if you are hospitalized due to the accident. Unlike income benefit, you do not need to be employed to receive this.
Do note that the coverage highlighted above may not be applicable for all personal accident plans. It’s also a non-exhaustive list and that there might be other coverage provided by your personal accident plans beyond what is listed. If you are intending to buy a personal accident plan, we suggest that you look through in details the areas that are covered.
Why Consider A Personal Accident Plan?
Not all consumers may see a personal accident plan as being essential. Some consumers may already enjoy coverage from their company’s group insurance plan. Some occupations and lifestyle would also require a higher degree of coverage as they are generally deemed as riskier.
This article from fundMyLife helps explain 5 things you should consider before buying a personal accident plan.
Even if you think you are adequately insured, there are still merits to getting a personal accident plan if you wish to enjoy a higher level of insurance protection.
For a start, even with a hospitalization plan, your medical expenses may not be fully covered. A minor accident which does not leave you hospitalised may still require x-rays and MRI scans and other follow-up treatments. A personal accident plan helps you defray some of the out-of-pocket expenses arising from these treatments.
For individuals who are self-employed, buying a personal accident plan can help provide them with additional protection on top of their existing private integrated shield plan. That’s because most personal accident plans provide policyholders with added coverage such as a weekly payout, up to a certain cap, if a policyholder is unable to work due to a temporary injury sustained from an accident.
If you are unsure about whether a personal accident plan is something that you truly need, and would like to seek the opinion and advice of a trusted financial advisor, DollarsAndSense have team up with fundMyLife to help get your financial planning questions answered. fundMyLife is a platform that connects users financial planning questions to the right advisers using an intelligent matching system.
You can ask the question that you have through the fundMyLife question box below.
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