Personal accident insurance plans: Yay or nay? There are as many split opinions as there probably are misconceptions about how they work.
Some think that it’s unnecessary to get personal accident insurance if they already have life and health insurance. Others think that it is only for those with risky jobs or hobbies.
But the fact of the matter is, as much as we avoid them, accidents do happen to everyone. They can have sizable financial implications and it’s important to make sure we are not caught out by them.
Here are some of the most commonly asked questions about personal accident insurance. Hopefully, by the end of it, you’ll be able to better decide if they are a necessity or not for you.
1. What are the benefits of personal accident insurance?
Personal accident insurance provides compensation to a person or their family in the event of an accident. The coverage includes death, total or temporary disability, and hospitalisation and outpatient expenses caused by an accident.
Other benefits include weekly income compensation for temporary disability, emergency medical evacuation, and coverage for repatriation costs.
One perk of personal accident insurance plans is that they can include coverage for treatment such as physiotherapy and Traditional Chinese Medicine (TCM), which can be costly and not necessarily included in typical health insurance plans.
2. What do accident medical expenses cover?
To put it very plainly: medical treatment needed as a result of an accident.
Imagine this scenario: you fracture your foot and have to receive treatment for it. Over the course of your year-long recovery, costs stack up. From doctor’s consultations, MRI scans and X-rays, they can come up to thousands of dollars. And that’s not even considering the cost for alternative treatment such as Traditional Chinese Medicine, which some opt for to get additional treatment.
These costs are covered under the “medical expenses” coverage terms in a personal accident insurance policy. It should be noted, however, that reimbursement for these costs can be subjected to a limit. In the above scenario, fractures — like many minor accidents — do not require hospitalisation. This means you will not be able to claim for these costs under your hospitalisation medical insurance.
There are cases in which personal or workplace medical insurance include outpatient coverage, and we advise that you check the benefits that you’re entitled to. Should you not have any outpatient coverage, you might want to consider getting personal accident insurance with a medical expense rider.
One scenario in which personal accident insurance is advisable is for those who are not eligible for medical health insurance due to pre-existing health conditions. It would be wise to buy personal accident insurance with higher limits in this case, since the medical expense rider would help to cover costs for more serious accidents that lead to hospitalisation.
3. My workplace insurance covers outpatient expenses. Do I still need additional coverage for medical expenses caused by accidents?
The outpatient benefits in workplace insurance policies often come with limitations and restrictions on outpatient specialist claims. There may be an annual limit for outpatient specialist claims, or an employee has to get a referral letter from a general practitioner before visiting a specialist.
If you think that there are too many restrictions on your workplace insurance, or you want to visit doctors of your choice outside of the list approved by insurance coverage, then you may want to supplement your coverage with a personal accident insurance plan with a medical expense rider.
4. Does personal accident insurance overlap with life insurance?
Life insurance covers death by any cause (usually excluding suicides in the first year). This includes death caused by accident or illness. On the other hand, the death benefit in personal accident insurance only covers death caused by an accident.
If a person has both life insurance and personal accident insurance, the payout depends on the cause of death. Consider the following examples
- a) Death caused by heart attack: only the life insurance policy will pay out.
- b) Death caused by traffic accidents: both life and personal accident insurance policies will pay out.
If a person has purchased sufficient life insurance, it is not necessary for them to purchase the death benefit in personal accident insurance. It is also unwise to assume personal accident insurance alone is sufficient to provide for the family in the event of death, as payouts are not a given in some scenarios, and there are some in which they may not necessarily occur.
If a person is unable to purchase sufficient life insurance due to reasons such as pre-existing medical conditions, or can’t afford life insurance premiums, they can consider personal accident insurance for some form of risk management.
5. What else do I need personal accident insurance for?
When considering personal accident insurance, few realise that some actually provide coverage for “accidents” like food poisoning and infectious diseases.
Some plans cover more than 20 infectious diseases, including dengue fever, and there are even some that cover Covid-19. There are even some plans that offer add-ons to cover the cost of replacing personal electronic devices that have become beyond repair due to an accident.
Contrary to popular belief, personal accident insurance isn’t exclusive to those with extreme hobbies or dangerous occupations. Accidental injuries can occur to just about anyone, and it’s a matter of discerning whether coverage is necessary, and how much if so.