Accidents happen. No matter how careful you are sometimes it is just going to happen. Life is just unpredictable and you do not know when its going to happen or indeed how it will happen but as you go through life you will expect that accidents will happen. The effect of an accident is just as unpredictable in how serious it is. Of course a minor accident is no big deal but what if you met with a major accident. The degree of seriousness is such that there will be a huge impact to yourself or your loved ones and therefore you need to be covered. The coverage will ensure that the accident will not leave you with additional financial problems but will compensate you for the losses suffered instead.
The difference between personal accident insurance and life insurance is that personal accident insurance will payout in the event of death if the death was caused by the accident. It will not payout for death from natural causes whereas a life insurance policy will payout for death whether it is by accident or by natural cause.
Another key difference between life insurance and personal accident insurance is that in some cases, life insurance will have some savings element to it. Personal accident insurance will not have this feature. It is a pure insurance product and has no savings element to it.
While there may be some subjectivity as to how an accident is defined but generally it will be due to an unforeseen event occurring that results in the loss for the insured person. If the even happens because of something silly that the insured did leading up to the time of the accident, it may be rejected as an accident by the insurer. Bottom line is if it really isn’t your fault, then it is probably an accident but if your actions led to the accident happening then you will struggle to convince your insurer to make a payment because they will not accept it as an accident.
Accidental death – This would be due to unforeseen circumstances like walking along the road and a vehicle loses control and ends up killing you. Of course in this situation something happened and you did not put your own life in danger knowingly. This is to be contrasted with the pursuit of a dangerous activity such as diving or sky diving which carries increased risk to the participant. Such activies are typically excluded from the policy
Permanent Total Disability – If you were walking along the street and a vehicle mounted the pavement and injured you but didn’t kill you then you might suffer the loss of a limb. This is the type of injury that would be classed as permanent total disability that a personal accident policy should cover. It could be the loss of both hand or both feet or one or both eyes or any combination of this. Can even cover the loss of hearing and the ability to speak.
Partial Permanent Disability – This would be an event when the insured person partially loses part of their limb. For instance the loss of a finger.
Medical expenses – Typically the insurance will pay for expenses that occur for a period after the event happened. Lets say that you injured a leg in an accident and needed surgery to fix it. The insurance would cover the cost of the surgery but should not stop there. There will be a period of rehabilitation in which you still need to seek medical treatment and this too should be covered for a pre-determined period
The insurance may even cover the cost of mobility devices such as wheelchair or crutches
Double indemnity insurance – in some policies if the death occurs while on public transport there may be an increased payout so check the fineprint on the policy wording.
Medical Evacuations and Repatriation – If the accident occurs overseas you and you need to get home for treatment then make sure that the insurance policy covers this scenario. The cost of repatriation if a team of medical advisors need to accompany you will be significant.
Personal accident insurance is relatively easy to find. In some cases you may find it bundled with other types of insurance. Eg your home insurance or your motor insurance may come with personal accident insurance.
Some credit cards may even offer this free as a service to their customers. It is always worth checking what the benefits are for holding particular cards. If this insurance is available for free then there is not much need to buy an additional poicy.
No matter what type of insurance you are looking for it is advisable to seek the guidance of a local professional financial advisor who can guide you in your own self assessment and tell you more about the products that are available in the marketplace.