Accident and sickness insurance | What you need to know | finder.com
Accident and illness protection

Sickness and accident insurance

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A supplemental life insurance policy can help cover ongoing expenses in the event of a serious illness or accident.

No matter what job you do, you depend on your wellbeing to pay the bills and put food on the table. For most Americans, taking an extended period of time off from work can have a devastating impact on your own livelihood and your family as well.

Accident and sickness insurance can help you keep on top of your expenses when you’re out of work so you don’t have to start chipping away at your savings. Start searching for the right life insurance policy now.

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    What is accident and sickness insurance?

    Accident and sickness insurance policies can offer peace of mind when illness or injury strikes a policyholder unexpectedly. These types of supplemental insurance can help offset a loss of income and ease the financial burden that may come with any additional medical or daily expenses. A policy claim can typically provide either a scheduled or lump sum payment when:

    • A serious injury or event leaves you unable to work
    • An accident leaves you permanently disabled
    • Death caused by an accident

    What’s covered in this type of policy?

    • Serious illness or injury
    • Paralysis
    • Blindness or deafness
    • Coma
    • Loss of speech
    • Broken or lost limb
    • Burns
    • Major organ transplant
    • Lacerations
    • Death (if caused by accident)

    What’s the maximum age of eligibility?

    The maximum age that you can take out critical illness and accident insurance varies between insurance providers. However, as a general rule, people aged from 18 to 75 years of age are typically able to apply for coverage.

    Most sickness and accident insurance policies will also stop providing coverage once you reach a certain age, usually 90+. Check the terms and conditions of the policy to learn more about the eligibility requirements.


    How can this coverage protect me financially?

    Useful features that can be added to some sickness and accident policies include coverage for:

    • Death. Beneficiaries will receive a payout if the policyholder passes away.
    • Home health service. Can help cover the costs of hiring an approved professional nurse to care for policyholder.
    • Rehabilitation. Helps cover the expenses of an approved rehabilitation program.
    • Rehabilitation expenses. Pays for various expenses that may arise during recovery — this can include home modifications relating to the injury or illness.
    • Medical expenses. Can help offset the cost of emergency room visits, ambulance or helicopter transportation, exams or treatments and any other expenses that may arise relating to your recovery.
    • Emergency evacuation. Paid to help cover the costs of returning the policyholder to the US or to a hospital in another country if they’ve become totally disabled overseas for a defined period of time.

    These extra benefits can provide great relief to a policyholder and let them focus on their recovery when the unexpected happens.

    What can a payout be used for?

    The benefit is designed to help the insured and their financial dependents maintain their current way of living when an income is either temporarily or permanently lost.

    This payout from the policy can be used for:

    • A mortgage or other outstanding debts (car loan, credit card)
    • Medical bill
    • Everyday living expenses (food, school, utility bills)
    • Change in lifestyle expenses e.g. modifications to the house

    Is my sickness and accident insurance policy tax deductible?

    In many cases, the premiums you pay towards the insurance are not tax deductible because the benefit is paid untaxed.


    What are the drawbacks?

    Personal accident and critical illness insurance should be viewed as a basic type of coverage with a limited range of protection. Here’s why:

    • Waiting periods. Some policies have a waiting period of 60 days before the insurance effectively kicks in. That means if you’re injured or fall ill in that brief period of time, you would likely not be eligible to receive a benefit.
    • Limited coverage. Some critical illness policies won’t cover any pre-existing medical conditions — and if they do, you’ll likely have a much higher premium due to your circumstances.
    • Different benefit periods: Personal sickness and accident insurance will have a defined waiting and benefit period for various situations.

    Is personal accident and sickness insurance right for me?

    Critical illness and accident insurance can be the right option for someone looking for a basic level of coverage at an affordable price. Sickness and accident insurance typically comes in the form of a lump sum payment or an annuity for a set amount of time. It could also be useful for individuals who only want a good amount of coverage for a short or medium term policy.

    As always, be sure to research each type of life insurance available so you can make a fully informed decision when finding the policy that meets your needs.

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    FAQ

    Richard Laycock

    Richard is the Insurance Editor at finder, and has been wrangling insurance Product Disclosure Statements for the last 4 years. When he’s not helping Aussies make sense of the fine print, he can be found testing the quality of Aperol Spritzes in his new found home of New York. Richard studied Journalism at Macquarie University and The Missouri School of Journalism, and has a Tier 1 certification in General Advice for Life Insurance. He has also been published in CSO Australia and Dynamic Business.

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