Personal Accident Insurance: What Does It Cover and Should You Buy One?

What exactly is a personal accident insurance plan? Do you need it? And what does it cover?  

Even though we take reasonable precautions in our daily lives, accidents can and do happen. Some accidents are caused by our own clumsiness or miscalculation: falling down the stairs, a slip in the bathroom or slicing our own fingers with a kitchen knife.

Some others are out of our control and done unto us, like a careless driver or an illegal PMD rider going about their way. The point is, accidents happen anytime and anywhere, whether we like it or not.

That risk of accidents also increases depending on the nature of your job (i.e if you're a food delivery rider or you operate heavy machinery in construction) and your lifestyle (i.e you're a YOLO-driven adrenaline junkie by weekends).

To offset these risks, consider getting a personal accident insurance plan— arguably a critical component in your portfolio.

What does a personal accident plan cover?

A personal accident insurance policy is a type of general insurance that provides benefits in the case of accidental death, disability and injury. The benefits usually cover all phases of suffering an accident, from evacuation to hospitalisation and treatment, rehabilitation and recovery.

Because there is also the possibility that an accident results in a fatality for the victim, personal accident plans also provide a death benefit. 

Personal accident insurance plans overlap with other types of insurance, including life plans, MediShield/hospitalisation plans and travel insurance, which can make them a little confusing to newcomers.

The specific type and level of coverage depend on the personal accident plan you purchase, so it’s important to shop around and compare plans in order to find the best one for your needs. 

Here is a summary table explaining the typical coverage of a personal accident plan.

When should you get a personal accident plan?

Consider getting a personal accident plan if you:

• Want higher protection against unforeseen accidents in general
• Regularly engage in outdoor activities or sports
• Work outdoors, with specialised equipment, or in high-risk jobs
• Are self-employed
• Want higher payout for the family in case of accidental death

A personal accident plan can be used to boost the payout a family receives in case of accidental death of the breadwinner. In the case of a fatal accident, the additional payout can offer an extra layer of protection to the surviving family members, which could include young children, stay-at-home spouses or retired parents.

If you're into adventure sports and love the outdoors, it may be worthwhile protecting yourself with a comprehensive personal accident plan. This will ensure you and your family have the resources to cope with any unfortunate accidents.

For adventure seekers taking it overseas, know that travel insurance plans can also offer many of the same benefits, including evacuation, medical treatment and hospitalisation. But given the current climate of a pandemic outbreak, travel insurance falls short when it comes to infectious disease coverage.

Employed workers can also rely on their company’s group insurance policy to provide coverage in case of accidental injury on the job, but this is not available if you're self-employed.

For such individuals, as MediSave contributions may be insufficient, consider investing in a personal accident plan to offset the hefty costs of recovery as well as to supplement any lost income.

When not to get a personal accident plan?

Consider skipping a personal protection plan if you(r):

• Have sufficient life coverage 
• Have sufficient medical insurance
• Don't participate in a lot of outdoors, or adventure, activities

The more serious outcomes of accidents are death or total and permanent disability, which are covered by a term life or whole life policy. If you have a life policy that offers a large enough payout in either of these circumstances, you may not need an additional personal accident plan. 

Similarly, if you have an Integrated Shield plan that comprehensively covers your hospitalisation bills, recovery and rehabilitation treatments, you may not need a personal accident plan.

However, note that Integrated Shield plans don't cover outpatient treatment due to accidents, some examples being broken bones, fractures, and dislocations. You will also have to decide if you require additional coverage for loss of income in case of long hospital stays; there are specific riders available for Integrated Shield plans, as well as standalone income replacement policies if you choose not to have a personal accident plan.

Lastly, if you don't take part in outdoor sports or activities, the likelihood of getting into an accident is lower. Hence, between your MediShield/Integrated Shield Plan (which covers you in Singapore) and a good travel insurance plan (which covers you overseas), you might not require an additional personal accident plan.

How much coverage should your personal accident plan have and what benefits to look out for? 

So after evaluating whether you need a personal accident insurance plan, you’ve decided to go ahead and purchase one.

The next question you might have is: how much coverage should your personal accident plan have, and what benefits should you look out for?

With insurance, having more policies is not necessarily better. Purchasing more policies than you need will cost you money that could be put to better use elsewhere in your portfolio, such as boosting your investments for greater returns. 

The key is to purchase enough insurance coverage that you and your family can continue living the same lifestyle, should accidents or medical emergencies take place.

Bear in mind that insurance is not meant to make you rich as you go about constructing your portfolio. 

This also means that you should choose your personal accident plan coverage according to your family’s needs, taking into consideration any current debts and future plans, such as overseas tertiary education for your children. 

Here are other tips to watch out for when choosing how much coverage your personal accident plan should have.

Tip #1: If you lack life insurance, opt for higher coverage

If you don't have a life insurance policy, or have only a small death benefit (likely from an endowment plan or similar), it might be worthwhile choosing a high death benefit for your personal accident plan.

Should you suffer a fatal accident, or become permanently disabled, a high payout in your personal accident plan will stand you and your family in good stead, especially if you are the sole breadwinner.

Tip #2: If you’re worried about loss of income while recovering, opt for income benefit

Besides covering the cost of emergency treatment, hospitalisation, and recuperation, some personal accident plans include an income benefit that pays out when you become temporarily unable to work due to accidental injury or hospitalisation. 

Depending on your insurer, this benefit may be paid weekly or daily, have a lifetime limit or the limit may renew on a periodic basis. Income benefits are especially critical to those who are self-employed, or who do not earn a fixed monthly salary. With a personal accident plan that provides an income benefit, you don’t have to worry about loss of income while recovering from your injury. 

Some accident plans also offer a daily allowance for hospital stays that are meant to help you and your family with out-of-pocket costs such as cab rides and other miscellaneous expenses. 

Tip #3: If your work is high risk, pair your personal accident plan with a term plan 

Those with high-risk occupations (such as manual labourers or heavy machinery operators) may have a hard time purchasing a personal accident policy. Your choices may be limited, and your premiums are likely to be high, as compared to someone in a low-risk occupation.

To help ensure you get a sufficient level of coverage, without incurring expensive premiums, consider boosting your coverage with a term life plan. Coupled with your personal accident plan, this can be a cost-effective solution to protect you and your family.

Tip #4: If you’re approaching retirement, opt for mobility aids and fall prevention 

Approaching retirement age in Singapore means losing access to company-sponsored medical plans, which may make a personal accident plan a crucial replacement. Have a chat with your family about retirement planning and how much you'll need in your retirement years.

Although your Medisave Account should be plump by the time you hit retirement age, a personal accident plan covers more than just hospitalisation and treatment fees. 

For example, a personal accident plan can be used to pay for mobility aids. Another way personal accident plans can help is by providing a benefit for installing safety features in your home, such as grab bar, anti-slip flooring and emergency call buttons. These minor but important additions can save you from a nasty fall, preventing the need for a hospital stay altogether.

Realistically, the chance of becoming permanently or partially disabled increases sharply the older we get. Should you, unfortunately, suffer a permanent disability, the payout from your personal accident plan can be used to provide you with the proper care required.

Read these next:
Personal Accident vs Life & Medical Insurance: What You Need to Know
5 Types of People Who Must Get Personal Accident Insurance
If I Get COVID-19, What Will I Need To Pay?
Home Insurance Promotions and Discounts To Protect Your Home
How Insurers and Banks Are Helping You Survive COVID-19 (Whether Quarantine or Debt)