As millions of people worldwide become infected with one of the worst pandemics in history, killing close to 300,000 people as of the time of this post, it becomes clear that the coronavirus respects no boundaries.
While we mostly go about doing the things we do normally, events like this pandemic remind us that there is always a possibility of things going beyond our control.
In this post, I want to talk about personal accident insurance plans – why they are a great addition to your insurance portfolio, and how to choose the right one for your needs. As with all insurance policies, it’s best to consult a financial advisor for tailored advice.
The world of personal accident insurance
Personal Accident (PA) insurance plans are rather straightforward insurance policies – in short, they cover you for any sort of accident that happens to you, paying you a sum of money which could be a lump-sum payment, a daily or weekly benefit if you’re unable to work due to an accident, or reimburse you for your medical treatment.
Say for example you are walking along the sidewalk and a PMD hits you from nowhere and you sustain bruises and a swollen leg. Or, you could also be a situation where you are traveling overseas and you need emergency treatment for a bad virus infection.
In other cases, you might suffer from accidental injuries that require medical treatment when sports, such as when you’re riding a bicycle and your tire hits a drain, sending you flying mid-air and as a result, you fractured both elbows while landing.
These are unforeseen events that might benefit from personal accident insurance coverage.
While we will explore the terms in greater detail below, it’s important to first understand that personal accident insurance is not the same as hospitalization or health insurance.
Hospitalization insurance only covers you in the event that you are hospitalized. If you’re not hospitalized for an injury (maybe you sprained your leg or burnt your hands), then you will not be covered by your hospitalization plan. I will further explore this topic below.
This is where personal accident insurance plans come into play to bridge that coverage gap. They are usually available at relatively affordable prices that will provide coverage when you are involved in an accident, and if you have the right riders, provide regular payouts necessary to tide you over financially.
What can I claim for?
Most personal accident plans provide round-the-clock and worldwide coverage for major and minor unexpected accidents. This means you can enjoy 24/7 coverage wherever you are in the world.
In addition to claiming for common injuries like sprains and bruises at a clinic or hospital, most personal accident plans cover TCM expenses as well. It covers all levels of severity of the accident, all the way to death.
There is no medical underwriting needed apart from general questions asked such as your age group, and whether you’re working at a higher risk job (which might increase the premiums).
Do I need both Personal Accident and Hospitalisation Plans?
In my opinion, personal accident plans are highly complementary to hospitalization plans because of how hospitalization plans are structured to prevent abuse and unnecessary wastage of healthcare resources.
Firstly, all new hospitalization plans now require those who are hospitalized (the policyholder) to co-pay at least five percent of his or her hospital bill. For accidents that require extensive medical treatment, this requirement can result in additional cash outlay on your end. For those that want to upgrade to a higher-class ward to enjoy personalized care during your recovery, a personal accident plan here fully reimburses you for all medical expenses incurred due to an accident.
Secondly, not all injuries or accidents might result in a hospitalization stay. For smaller accidents like spraining an ankle, or fracturing a bone, you cannot claim a reimbursement from your health insurance if you’re not hospitalized. Your healthcare insurance might also exclude a claim for certain tests such as MRI scans and X-rays even if you’re hospitalized. Once again, a personal accident plan here fully reimburses you for the medical expenses – even if you’re not hospitalized – incurred due to an accident.
Thirdly, personal accident plans can provide additional cash payouts when you’re hospitalized due to an accident. Now, this is very useful if you work in the gig economy (e.g. if you’re a delivery rider) because your income is directly tied to your ability to work. These payouts can help you stay focused on the recovery while providing some sort of financial assistance when you need it most.
Things to look out for in a Personal Accident Plan
I’d say that the core of most personal accident plans in the market are relatively similar in terms of coverage. Apart from small subtleties from insurers that try to set their plans apart from the competition, the essence is to find one that pays out cash quickly whenever you encounter an accident with no questions asked.
You can tailor the coverage you require (based on how much you would like to be reimbursed whenever you encounter an accident). I personally wouldn’t overpay for these and recommend people to find the broadest coverage at the lowest cost they can afford to pay.
You’d also want to choose one that covers overseas medical evacuation and ambulance costs, which is important as these stray costs can add up quickly whenever there is an accident. Finding one that covers as much of these stray costs as possible would reduce your out-of-pocket expenses to zero whenever anything unfortunate happens to you.
The best ones keep their prices low and affordable for core coverage, while allowing a set of riders for consumers to opt into for non-essential but good-to-have coverage such as reimbursement for event cancellations.
Pricing vs Coverage
Personal accident plans in the market range from $100 to $400 a year depending on their coverage and your profession.
Premium costs for personal accident insurance can increase by 50%-80% depending on your occupation. If you declare that you are working in a high-risk occupation such as a taxi driver (compared to an office staff), many insurers will jack up the costs of the premiums in response to compensate for the additional risk they are undertaking. This is known as occupational loading.
That’s probably the reason why many personal accident plans in the market are out of reach for Singaporeans. It’s an essential piece of insurance, but often, the ones that need it the most cannot afford it.
Aside from costs, the other important thing is coverage. Can the personal accident plan that you buy cover you for all sorts of accidents that might possibly occur to you?
Aviva’s PA Lite for example, covers personal liability, which reimburses you for damage or injury to another person/thing caused by you. Manulife’s Ready Protect has double payout for accidental death and dismemberment. Prudential’s PRUPersonal Accident has free extension coverage for food poisoning and accidental miscarriage.
The recent addition to the list is COVID-19 coverage, which pays you if you are infected with the coronavirus that’s spreading around the globe. If you work at a job that puts you at a higher than average risk of contacting COVID-19, for example if you’re an essential service provider, then this additional protection might be helpful.
Not many insurers offer COVID-19 protection today built into their personal accident plans. They usually list them as a free but temporary additional or special cover for eligible customers. For example, AIA’s special cover lasts up till the end of the year (or when the DORSCON is changed to green, whichever is earlier). DBS’ free COVID-19 cover lasts only 30 days, and those that want to extend need to purchase additional coverage with the Recovery Hospital Cash policy.
An affordable, all-in-one personal accident plan with infectious disease and COVID-19 cover that I recently came across is this PA plan from FWD called FWD Personal Accident and Infectious Disease Coverage Insurance that triumphs many others in the market when it comes to both cost and coverage. Most people don’t know about it because it rarely gets advertised.
It costs just S$98 per year – regardless of your profession – which works out to S$0.27 a day to protect against accidents and infectious diseases like COVID-19. The table of benefits is shown below, which is illustrated for infectious diseases and food poisoning.
The sum insured for benefits will be doubled (multiply all the numbers in the right column by two) if the accident is not due to infectious diseases and food poisoning.
Personal accident plans provide cash payouts from accidents – unexpected events that you will not foresee coming.
While preparing for the plausibility of an unfortunate event, the key thing to look for in a good personal accident plan is balancing wide functional coverage with affordability. For the higher risk workers, and those at higher risk of infectious diseases, not insuring yourself is out of the question. The costs of hospitalisation and outpatient care for accidents not covered in your existing healthcare insurance must be weighed against the cost of buying a personal accident insurance.
For the rest of us, personal accident insurance offers more like a peace of mind as a complementary policy to our existing health or hospitalisation insurance.
For those who are keen, you can get the FWD Personal Accident and Infectious Disease Coverage directly from SingSaver, who has partnered with FWD on distributing the policy. There is no sign up bonus for this policy.
Please note that the waiting period for infectious diseases is 15 days from the start date of policy coverage so you can only make COVID-19 related claims only if you have passed 15 days from your policy start date.