A personal accident plan or PA plan is a type of general insurance that provides policyholders with financial support in the event of an unfortunate accident. As its name suggests, a personal accident plan is primarily meant for protection against accident-related complications, providing compensation for injuries, disabilities or death.
In such an instance, you and/or your family would require financial assistance to continue enjoying a similar standard of living, even with the loss of your income. Even in accidents that are not as serious, injuries could prevent you from working for a period of time and leave you with medical bills that you cannot typically claim on your health insurance.
Coverage provided by PA plans
There are four main categories of coverage on personal accident plans:
1. Death Benefits
If you were to lose your life due to an accident, your family would typically receive a payout worth the insured amount.
This would be on top of any life insurance you may have, and provide your family with greater financial security in your absence.
2. Permanent and/or Partial Disability
An accident may also cause a person to suffer permanent disablement or lose vital physical functions that may render him or her unable to earn an income or comparable income.
If you were disabled from the accident, either permanently or partially, you would receive a payout. Such payouts can be put towards caring for both your medical and daily needs as well as for your family.
Typically, there are also riders you can purchase which will provide for mobility aids reimbursement, home modification reimbursement and coverage for other potential expenditure you may incur after a serious accident.
3. Temporary Disability
Accidents, even if not serious, can result in temporary disability or leave you unable to work for a period of time. In such cases, personal accident coverage can also be put towards medical reimbursement.
You may also be able to purchase additional riders to cover income replacement benefits.
4. Medical Expenses and Hospitalisation Benefits
You may also be able to claim certain outpatient and inpatient medical fees for your treatment. However, coverage under a personal accident plan may not be as comprehensive as health insurance coverage, and you should not rely on it to cover majority of your medical costs.
On many personal accident plans, you may also be able to purchase additional riders for hospitalisation benefits. This comes in the form of a fixed daily allowance based on the duration of the hospital stay, ambulance services, broken bone benefit and/or medical evacuation and repatriation benefit.
Why a PA plan is an important component of your overall insurance coverage
Not everybody thinks that personal accident coverage is necessary or crucial. Some may even believe that personal accident insurance coverage is more suitable for individuals employed in high-risk occupations or by those partaking in risky day-to-day activities.
This isn’t true as an accident can strike anyone. Even if you think that you have sufficient health or life coverage, there are several key benefits to being covered by a personal accident plan that you should consider.
1. Accidents are not an “if” but a “when”
Accidents can arise when you least expect it. It can happen because you are plain careless or by just being in the wrong place at the wrong time. Accidents are not just unpredictable and unexpected, but can expensive too.
Your health insurance only provides coverage when you are hospitalised and for medical treatments. If you are unable to work after an accident, your emergency savings can be quickly wiped out. Hence, you should be prepared for such scenarios.
2. Covers outpatient treatments
An important benefit of a personal accident plan is the ability to claim medical reimbursement for certain inpatient and outpatient treatments, such as an MRI scan or a CT scan, which can be costly, after an accident. Unlike hospitalisation plans, personal accident plans do not require you to be hospitalised to be able to claim for certain treatments.
You can view your personal accident plan as one that complements your health and life insurance coverage.
3. Income benefits
Accidents have the potential to impair a person’s ability to work, either on a long-term or short-term basis, or depress your future earning power.
In such scenarios, a personal accident plan will be able to protect you from accident-related medical bills as well as provide compensation to make up for lost wages. This is through paying a daily hospitalisation benefit and/or a lump sum payout.
4. Extensive coverage
While nobody ever wishes to be struck with an accident that disables them. However, it is always better to be safe than to be sorry. Mild or serious disabilities that hinder your ability to generate an income will not be covered under your life insurance or health insurance.
For life insurance, coverage is only applicable if you lose your life or suffer total and permanent disabilities. Health insurance only takes care of you when you are hospitalised, and do not provide lump sum payouts for you and your loved ones to tide through challenging financial situations.
A personal accident plan, on the other hand, provides this peace of mind, enabling you to focus on getting better and bouncing back as quickly as possible. While Singaporeans also enjoy a national severe disability coverage under ElderShield (and CareShield Life in the future), the criteria for receiving a payout tend to be more stringent – losing three out of six ADLs (activities of daily living).
Ensure sufficient personal accident protection
As mentioned, a personal accident plan is not meant to replace your health or life insurance coverage. Rather you want to insure yourself with such a policy to cover potential gaps in your coverage that may leave you and your loved ones vulnerable to unpredictable scenarios in life.
The AIA Solitaire Personal Accident Plan provides you with comprehensive coverage, providing financial support in the event of an injury, disability or death, giving you much needed peace of mind.