A personal accident plan can ease the burden of medical costs, by transferring some risks to insurers
We all try our best to avoid accidents or being bitten by mosquitoes carrying the Zika virus, for example, but they may still happen. Accidents, particularly serious ones, can cause a financial strain on a family, especially in the event of death, or permanent disability resulting in the loss of a job or a long period of medical leave.
The good news is that we can consider transferring some of these risks to insurers by purchasing a personal accident insurance plan which will ease the financial burden of medical expenses. These risks include not being financially prepared for medical treatment - those not covered by your hospitalisation plan such as some outpatient visits - and potential loss of income.
To stay relevant, the scope of coverage under a personal accident plan has evolved over the years. It includes medical expenses arising from infectious conditions such as hand, foot, and mouth disease (HFMD), dengue fever and Zika, and even accidental food poisoning.
Q What is personal accident insurance?
A Personal accident insurance primarily covers accidental death and permanent disablement. Permanent total disablement occurs when the insured person is unable to work owing to accidental bodily injury. Some policies also cover permanent partial disablement, which includes loss of fingers/toes, third-degree burns, temporary total disablement and/or temporary partial disablement.
One important benefit is the provision of inpatient and outpatient medical expenses. In the event of minor accidents, such as a slip or fall, outpatient coverage for consultations comes in handy, as this is not covered under medical insurance - unless it is a pre- or post-hospitalisation treatment. This is one of the most common claims insurers receive, said Ms Koh Yen Yen, Sompo Insurance Singapore's chief distribution officer.
The weekly income benefit - which provides a cash benefit for every week of temporary disablement - is usually offered as an optional benefit or included in a comprehensive plan.
"This provides financial assistance to the family and is especially helpful for those who are self-employed," said Ms Koh.
Nowadays, it is common to find additional benefits like emergency medical evacuation and repatriation, and treatment by licensed Chinese physicians and chiropractors, in a personal accident cover.
Other notable benefits offered by some comprehensive plans include:
•Medical expenses as a result of specified infectious diseases such as avian influenza, Sars, Zika, HFMD, and dengue fever;
•Mobility aids, including purchase or rental of wheelchair as prescribed by the doctor;
•Facial reconstructive surgery after an accident; and
•Cash benefit for "happy events", such as for birth of child.
Q I already have a life insurance plan, a hospitalisation plan and a critical illness cover. Is personal accident insurance necessary?
A Some people consider their life and/or medical insurance policies to be sufficient to cover them in the event of an accident. And personal accident insurance does not provide coverage against sickness or general disability which would be covered under medical and critical illness coverage.
Still, many people are unaware of the complementary benefits provided by personal accident insurance so as to achieve more comprehensive financial protection, said Ms Koh.
A personal accident plan can complement a life insurance cover in that it pays for permanent partial disablement, temporary total disablement and/or temporary partial disablement. For example, in the event of the loss of sight in one eye, or the loss of the use of the fingers on one hand, there will not be a payout under a life insurance policy. But the personal accident plan will provide a payout.
A personal accident plan also pays on top of a life insurance policy for death and permanent total disability.
Ms Koh added that personal accident insurance complements medical coverage in that it pays for outpatient medical expenses, including treatments at Chinese physicians and chiropractors. Personal accident coverage also helps cover the co-insurance and/or deductible under a hospitalisation insurance plan or a company's outpatient medical insurance plan, for accident-related expenses.
Q Are there any terms and conditions that I should look out for in a personal accident plan?
A HL Assurance suggests that it is prudent to review your personal accident coverage every three to five years. This is because customers may be able to get improved products at similar premiums.
Ms Koh advised customers to look out for the variations in the coverage terms.
•Definition of accident: An "accident" in a typical personal accident policy means an event caused by "violent, visible and external means". A more comprehensive policy would have a wider definition such as an "identifiable event which is sudden, unforeseen or unexpected". For example, policies with a more restrictive definition would not cover accidental choking.
•The coverage period after accident resulting in death or medically certified permanent disability: This period typically ranges from six months to as long as 18 months. A longer coverage period is more advantageous to the policyholder. For example, if the insured is unable to regain the use of a finger after months of therapy and is certified to be partially permanently disabled after the coverage period, no benefits will be payable to the insured, added Ms Koh.
Q How much would a personal accident cover cost?
A The premium payable for personal accident insurance is a lot lower than for a life insurance policy, for the same sum insured. There is no requirement for a medical examination and the policy does not take into account pre-existing medical conditions.
For an assured sum of $100,000, the annual premiums could range from $85 to $300. Liberty Insurance notes that for a smaller sum insured of $50,000, the premium may start from as little as $50 per year.
Mr Bevan Cheong, head of accident and health business, Tokio Marine Life Insurance Singapore (TM), said that premiums on personal accident plans do not depend on age or gender. Instead, the criteria for pricing includes scope of coverage and the occupations of the insured persons.
"Premiums would depend on one's occupation. Customers in low-risk occupations such as administrators, editors, programmers, students, and so on, would pay the lowest premiums. Customers in high-risk occupations such as construction workers, deliverymen, high-rise window cleaners and welders would pay a substantially higher premium," he said.
Ms Koh said that there are also family plans that provide discounts for insuring the whole family - for example, free coverage for eligible children if both parents are insured. Family plans usually include the two parents, children who are studying full-time and those aged below 25.
Unlike medical insurance, personal accident policy premiums do not increase with age. However, note that there are age limits applicable, and the sum insured could be reduced for policyholders above a certain age.
Over at Tokio Marine, its TM PA plan offers free child cover for the policyholder, of up to four children below age 18, so long as one parent is insured. TM Protect PA offers enhanced coverage against three specific conditions - HFMD, dengue fever, and food poisoning, while TM Protect Mosbite covers any of five mosquito-borne diseases - dengue fever, Zika, yellow fever, malaria, and chikungunya (commonly known as "chicken malaria") - with a lump sum payout of up to $3,000 upon diagnosis. The annual premium for TM Protect MosBite with a $3,000 sum assured is $59.
TM PA and TM Protect PA plans offer worldwide coverage while TM Protect MosBite requires the covered diseases to be diagnosed in Singapore.
At Sompo, the most popular plan is PAStar, which offers benefits such as coverage for medical expenses incurred as a result of contracting 17 specified infectious diseases, including Zika, dengue fever, HFMD; full terrorism cover; re-employment benefit - which can be used to pay for courses that will allow the policyholder to engage in an alternative occupation; a baby bonus allowance of $100 on the birth of each child up to two children per policy year; and reconstructive surgery for facial disfigurement and trauma counselling expenses.
Q Who would need personal accident coverage more?
A Mr Ankush Bhardwaj, director, lifestyle underwriting, at AXA Insurance, advised that individuals who are vulnerable and exposed to greater risks would benefit from a good personal accident cover.
"This includes people who are in sports, children, the self-employed, the elderly and unemployed individuals, as they are not covered under any form of employee benefits," he said.
Mr Cheong said that those employed in high-risk occupations, such as construction workers or high-rise window cleaners, could consider this cover.
Ms Koh noted that the accident rate is higher for children and the elderly, compared with the general population base. As such, insurers have come up with products that cater to the needs of these groups.
For example, Sompo's PAJunior plan caters to children from as young as one month old. Child-friendly benefits include childcare and a school fee subsidy, which reimburses any childcare charges or school fees incurred during hospitalisation and while recuperating at home due to an accident; an additional sum insured during school sports and competitions; a quarantine allowance for 16 infectious diseases including HFMD and dengue fever; and cover for accidental food poisoning and insect/ animal bites.
However, while these policies apply to certain higher-risk groups, accidents, of course, can happen to anyone.
Q Customers tend to confuse personal accident with travel insurance. What are the differences?
A Mr Cheong said that personal accident insurance and travel insurance are designed to serve different purposes, although they may share some similar benefits. Personal accident insurance plans generally do not cover travel-related events such as trip cancellations, emergency medical assistance and evacuation, or baggage delays.
AXA's Mr Bhardwaj said that personal accident insurance covers the customer 24 hours a day, seven days a week, and usually applies regardless of where he is geographically. On the other hand, travel insurance covers the insured only when he is on a trip outside Singapore.
Ms Koh noted that personal accident cover is a standard benefit found in all travel insurance plans.
She said: "The personal accident section under a travel insurance plan is intended to cover accidents occurring during the trip, though some policies have extended them to cover accidents while travelling to and from the airport.
"To cater to some common adventurous activities undertaken during a trip, many travel plans now cover activities such as hot-air ballooning or underwater activities which may be excluded under personal accident insurance."
If you have any further doubt or question on Personal Accident Insurance, do contact me and I will be glad to be at your service to assist you in any of your financial planning and investment opportunities.
