What is personal accident insurance?
A personal accident insurance is a policy that compensates you in the unfortunate event of accidental injuries, disability, or death. Depending on the plan that you purchase, it is paid either by reimbursing your medical fees, or a lump-sum payment based on the injuries that you’ve acquired.
Such disabilities may include loss of limbs and permanent injuries. As long as the mishap was incurred via an accident, payouts and/or medical fees will be provided by the insurance company. The amount received by the payouts and the medical fees claimable varies according to the coverage of the plan that you purchase.
Some common scope of coverage provided by most insurance companies are:
- Accidental Death
- Permanent/Temporary Total Disability
- Permanent/Temporary Partial Disability
- Medical Fees
- Corrective Surgery
- Traditional Chinese Medicine (TCM)
- Hospitalisation Fees
- Income Benefits
- Daily Hospital Benefits
- Funeral Expenses
For those who are employed and are unable to work due to the injury/disability, the policyholder will be able to receive the income benefits which are usually paid on a weekly basis. Those that are unemployed are able to enjoy hospital benefits payouts as compared to those who are working. Do note that the list above is non-exhaustive and coverage varies depending on the plan purchased.
Why personal accident insurance?
To some consumers, personal accident insurance plans are deemed unnecessary as they already have coverage from hospitalisation plans, life insurance, and even their company’s group insurance plans. Yes, other insurance plans may provide coverage for things that are insured under a personal accident insurance plan, however, most plans do not provide full coverage.
For instance, life insurance only provides coverage for natural death and not accidental death. In 2018, there were 5056 car accidents, about 96 lead to fatality. This does not include non-traffic related accidents that you might face. Other accidents such as falls, killer litter, violence, and PMD/bicycle crashes are just some other common accidents that happen in Singapore.
Hospitalisation plans might also not provide full coverage for your fees. In the scenario where you meet an accident but are not hospitalised, follow-up treatments and imaging are covered in the personal accident insurance plan but not in hospitalisation plans.
If you are freelancing/self-employed or have a risky job or lifestyle, personal accident insurance is also something that you should consider.
Is personal accident insurance worth it?
Personal accident insurance is definitely worth it as it is a complementary policy that provides additional coverage for you. As covered above, life insurance and hospitalisation insurance plans do not provide you with comprehensive coverage. To ensure that you are covered extensively, a personal accident insurance plan is definitely be something that you should take note of.
Furthermore, most plans do not require a medical underwriting unlike life insurance, and it is generally of lower cost depending on the criteria of each insurance company. Costs also vary depending on how much coverage you need. Hence, it is something that contract workers, self-employed, and those who have lifestyles that involve a lot of risks should consider.
How much personal accident insurance should I have?
This question depends on each individual. Ask yourself these questions to consider if you need a personal accident insurance plan.
- How active is your lifestyle?
- How often do you participate in adventurous activities?
- Do you have life insurance and what is the coverage like?
- Do you have hospitalisation plans and what is the coverage like?
- Does your job put you at risk of accidents that may cause injuries or death?
- Are you at risk of any other accidents that may cause injuries or death?
Upon answering these questions then you will know if you need or should have this as part of your financial portfolio. If you are uncertain if you need, talk to one of our financial planners and get advice on what plans you should have.
How to choose personal accident insurance plans?
There are many personal accident plans out there in the market and each plan differs depending on the company. When making your choice on a personal accident insurance plan, you should take note of what each plan covers and whether you need it. You should also take note of how much each plan covers and whether it suits your budget and/or covers the things that you lack in other aspects of your financial portfolio. Lastly, take note of the payout methods on whether it is on a reimbursement basis, lump-sum payment, or both.
Edit by Singapore Financial Planners team:
If you’re looking to understand whether you will need a personal accident insurance plan, consult a financial advisor.