Personal accident insurance explained
Accident insurance is a form of coverage that protects you financially in the event of an injury sustained from an accident. If an incident occurs, accident insurance will generally cover you in the form of a lump sum to offset the burden of medical bills and other expenses related to your injury.
7 reasons to buy accident insurance
Accident insurance can provide you financial protection in the event of an injury sustained from accidents. Some of the reasons to consider this form of coverage include:
- Cover additional expenses caused by an injury. This can include the costs of rehab and what’s not covered by your health insurance.
- Usually no medical underwriting required to take out standalone coverage. This a viable option for applicants that have been refused life insurance in the past.
- Peace of mind. If you have many hobbies and stay physically active throughout the year, it may be beneficial to have extra coverage in place in case of an accident.
- Low cost. A policy can be as little as $15 a month depending on factors like where you live, your age and how much you coverage you’d like.
- You don’t have the savings. If you suffer an accident which renders you unable to work, your policy can provide financial assistant to offset being out of work.
- You want to be protected until you retire. You can choose different term lengths that can cover you until you’re ready to retire so you don’t have to access your retirement savings and investments ahead of time.
- You’re self employed or employed on a casual or contract basis: You may not have sick leave if you’re self employed. In this situation, accident insurance could protect your finances if you’re unable to work.
The easy way to compare and buy life insurance
Get a free quote from more than a dozen term life insurance companies.
- Find the right amount of coverage that you need.
- Compare prices from over a dozen companies.
- Free online access to experts.
- Already helped over 4.5 million people shop for insurance.
How does accident insurance work?
Personal accident is covered by various types of insurance. Here’s how it works:
What’s covered?
You’re covered if you get into an accident that leaves you either:
- Disabled
- Unable to work
- With a defined injury (on some policies)
How am I paid out?
You’ll either receive a lump sum payment or a monthly cash benefit to act as the income you’re missing out on from being injured.
What type of accidents am I covered for?
It’s important to keep in mind that what is defined as an accident may vary between insurers: Here are a few examples of common injuries you would be covered for with accident insurance:
Accident type | What does this include? |
|---|---|
| Accidental death and dismemberment | Quadriplegia |
| Accidental loss of life | |
| Paraplegia | |
| Disability | Permanent total or partial loss of eye sight |
| Permanent total or partial loss of hearing | |
| Permanent total loss of use of one or two limbs | |
| Permanent total loss of speech | |
| Leg and arms | |
| Fracture injuries | Thumbs, fingers and toes |
| Skull | |
| Jaw | |
| Collarbone or sternum | |
| Kneecap and elbow | |
| Wrist, ankle, hand and food | |
| Ribs | |
| Nose | |
| Neck |
What are the benefits of taking out accident insurance?
There are a number of other benefits you can get from having such a policy:
- Premiums are tax deductible. The premiums you pay can be claimed as a deduction at tax time as long as you pay the total cost of the premium out of pocket.
- Choose how your benefit is paid: You can choose to receive your benefit as a lump sum payout to help with upfront medical expenses or have your benefit paid as an ongoing monthly income to help with your living expenses.
- Disability benefit: Most personal accident insurance policies will include a benefit payout for disability. For example, if you suffer a total loss of speech, hearing, sight or the loss of the use of a hand or a foot, you’re considered to be eligible for a total and permanent disability benefit.
- Associated accident costs: There are a lot of incidental costs involved, and a personal accident insurance policy can provide a benefit payout to cover, counselling, rehabilitation, the cost of any damage to clothing or personal property and the cost of any specialist transport required to get you to hospital.
How do I make sure I’m covered when I make a claim?
Follow these key steps before you sign up for a policy:
- Understand the full list of injuries and accidents that are covered. If it’s not listed, it won’t be covered.
- Disclose your medical history and work information. If you don’t disclose, you can be denied for a claim later on.
- Understand it may interfere with your workplace coverage. Some policies won’t pay out if you’re entitled to workers compensation.
When am I not covered?
Personal accident insurance does not generally cover:
- Injuries which have been self inflicted
- Dental injuries
- Accidents due to prior illnesses
- Injuries that have occurred while committing crime
- Dangerous behavior
- Injuries under the influence
While you can’t expect the unexpected, you can prepare for the worst by protecting yourself and your income with accident insurance. Plus, even if the worst doesn’t happen you’re still rewarded with peace of mind and tax deductible premiums.
Why might my claim be denied?
Some reasons for claims being denied can include:
- Pre-existing medical conditions or injuries. Many policies won’t cover pre-existing medical conditions and injuries.
- The exact injury or illness is not covered. Most policies will have a defined list of injuries and illnesses that they will cover.
- Non-disclosure. Claims can be denied if applicants don’t disclose a pre-existing condition or injury (even if it’s covered) or an occupation they are not covered for.
- Workplace injuries. While accident insurance will cover workplace accidents, claims may be denied on some policies if you’re entitled to compensation from you workplace.
Who might consider personal accident insurance?
Personal accident insurance can benefit many people of many occupations. These include:
- Volunteers. Volunteer workers can get access to personal accident insurance in case they are unable to perform their duties.
- Children. Accident insurance for your children can protect them if they suffer a serious injury outside of your home. Knowing your child is protected and you won’t be out of pocket for all of the medical expenses can afford you peace of mind.
- Tradesmen. Should you fall ill, be injured or die (some policies), you’ll have financial protection with accident insurance. In some cases, you may find it difficult to apply depending on the level of risk that you’re exposed to at your place of work.
- Athletes and extreme sports players. You can take out a accident insurance policy if your body is how you earn your living. In this case, policies may be expensive due to the risk of injury involved.
Is there an age limit for accident insurance?
The age limit for accident insurance will vary by insurer, however, 70 years old is a common cutoff age for eligibility. Some policies that extend coverage to the elderly may reduce the payout benefit as the insured gets older.
What determines how much I pay for coverage?
There are several factors that can affect the cost of your accident insurance premiums, including:
- The waiting period. The shorter the waiting period you select, the more you’ll typically have to pay for coverage.
- The benefit period. Longer benefit periods attract higher premiums.
- Your occupation. People who work in high-risk occupations generally have to pay more.
- Your benefit amount. The higher the benefit amount you’re eligible to receive, the more you’ll pay.
- Your age. The older you are, the greater your risk of accidental injury and therefore the higher your premiums.
Is accident insurance right for me?
Personal accident insurance can seem like a duplicate policy if you already have life insurance, accidental death or you know you’re protected by workers compensation. However, think about how you would pay your bills and care for your family if you were unable to work because of an accident that happened outside of the workplace.
If you decide accident insurance is the right move for you and your loved ones, be sure to shop around and research in order to find the policy that’s the right fit for your lifestyle.