Personal Accident Plan – Why | How | What

Insurance policies can be broadly broken down into savings, investment and non-saving plans. Saving plans may give you some form of return at policy maturity date. Likewise, investment plans too can give you a return or loss based on the fund performance over the period and fund value at the point of maturity. On the other hand, non-saving policies do not have a return. So where does Personal Accident insurance Policy fit it? What is a personal accident insurance policy? Why do you need a personal accident insurance policy and where can you purchase your personal accident insurance policy? Most importantly, what should you be aware of when selecting your next personal accident insurance policy? In today’s topic of “Personal Accident insurance Insurance – Why | How | What”, we will explore these questions and more.


What Are Personal Accident Plan?

Personal accident plan are just another type of general insurance that provides the policy holders with financial support by a payout in the event they met with an unfortunate accident. Depending on the type of accident and the gravity of it, the payout can be lump sum (one time) or reimbursement basis, based on medical expenses incurred.

Let’s take an example, in the event of a death arising from accident or a permanent loss of a limp due to an accident, the personal accident plan will usually provide a one lump-sum payout.

Due to an accident, if the insured in admitted in the hospital, these personal accident plan will also cover medical expenses on a reimbursement basis. Medical expenses such as consultation, surgical, hospital stay medicine and even TCM can also be covered by Personal Accident Plan. How much you can claim for your medical expenses? It depends on the type of plan you have, and the maximum claimable coverage limit of your plan.

Personal Accident plan - Why | How | What

The Types of Insurance Plans?

You could be assuming your life insurance plan does the same. The answer is, YES And No. To avoid confusion, let us quickly clarify what are the different type of plans and what they cover as compared to your personal medical insurance plan.

Life Insurance: A kind of saving plans, they will also pay in the event of accidental and natural death. Life insurance plan can also pay out in the event of total permanent disability. Usually these plans will NOT make a payout for partial or small costs arising from accident. For example, you fractured your leg during your weekend sports and you ended up staying in hospital and spending 2K in total, since you are not permanently disabled, your life insurance plan will not make any payout

Hospitalization Plans: These plans help you cover cost of medical expenses, usually the room and board charges. Due to illness or accident, if the insured was admitted to the hospital, hospitalization plans will help you cover the cost of the rooms and board charges. It can include medications and x-ray charges as well. Depending on the plan, you can be paid a daily some (E.g. $100) for the number of days you spend in the hospital, up to a maximum limit. You will not be paid anything if you are not admitted to the hospital!

Critical Illness Cover: This is a special plan or rider that is attached to other policy like a life insurance policy. It makes a lump-sum payout if the insured if diagnosed with one of the usually 30 major critical illness. For example, cancer. With the lump sum payout, you are free to do anything with the money, but, usually you will end up using the money for your prolonged medical treatments.

Personal Accident Plan: This plan pays out if the event of any form of accident takes results in monetary loss for the insured. A minor fracture to major disabilities arising from accident and not sickness. Chances of death is once but the chances of meeting with accident are high in a life time. Remember, you do not need to be admitted in hospital (like how hospitalization plans work) to claim from your personal accident plan. That is why, Personal Accident Plan becomes of the most important insurance plan in your portfolio.

Let’s continue.

Probably you may want a small break now. Once you are ready, continue with part two and final part of this article on personal accident plans. You can continue reading second part of this article here.