Why are personal accident insurance plans at SG crucial?

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Last year, we wrote an article about the risks of having a car accident, and what we discovered was shocking: from 2020 to 2021, the number of fatal accidents rose from 80 to 100 per year. We have around 12.96 road deaths per 100,000 cars in Singapore, slightly below the global average, but only 35% of Singaporean households own a car.

What is an Individual Accident Plan?

A personal accident insurance plan is a stand-alone plan that provides comprehensive coverage in the event of an accident. Coverage and premiums can be as affordable as the SingLIfe AVIVA Personal Accident Plan or as comprehensive with as many benefits as possible.

Some personal accident insurance, such as FWD Personal Accident, covers infectious diseases such as dengue, even as recent as COVID-19. Other accident plans offer additional benefits, such as TCM and worldwide coverage, and cover other accidents like food poisoning. This makes their premiums more expensive.

As a disclaimer, a personal accident insurance plan is more than just a rider that provides additional accidental death coverage, such as Accidental Death and Dismemberment Benefits (ADDB ) or Accidental Death Benefits (ADB). Accident endorsements related to life insurance plans are just a small subset of the entire category.

So what are the benefits of having an accident plan in Singapore? Why is this so important? Like life insurance, it protects your income, net worth, and the financial well-being of your dependents.

Personal accident insurance plans protect your income

Singapore $50 banknotes

Having personal accident insurance can protect your income, because if you were to become disabled due to an accident or illness, your insurer would be able to pay part of your wage income for a long time.

Other accident plans provide daily cash benefits (usually a few hundred dollars) when you are admitted to hospital (note however that this benefit is not permanent and there is a maximum number of days during which you can get daily cash benefits).

Some personal accident insurance plans offer disability income insurance (DII), also known as income protection. This DII plan allows the insured to earn up to 75% of their income in the event of disability caused by an accident or illness. There are a few factors you need to understand before you become disabled as this will affect your premium.

Occupation

Suppose you are a blue collar worker working in a high accident risk occupation. In this case, your premiums will be more expensive than those of your white-collar colleagues, who are less likely to have an accident.

Benefit period

The benefit period is the number of years that you would have your recurring monthly income paid by the insurer, and the benefit period can be as short as five years or as long as sixty. The longer the benefit period, the higher the premium.

Deferred/Waiting Period

The deferred period, or waiting period, is the time that elapses between the event giving rise to the disability and the day on which the insured receives the indemnity from the insurer. Deferred periods can range from 45, 90 to 180 days.

To prevent too many people from choosing a short deferral period for short-term claims, your premiums decrease the longer your deferral period is. Short deferred periods are suitable for the self-employed, as they are less likely to have business insurance. Long deferred periods are ideal for those who are more budget conscious.

Personal accident insurance plans protect your net worth

piggy bank in front of a white background

An accident plan prevents your savings and net worth from being compromised by costly medical bills, as medical bills increase every year due to medical inflation. According to Singapore Department of Statisticshousehold health spending fell from 6.1% in 2014 to 6.6% in 2019.

In fact, in another article we wrote last year, the medical bill for a B1 ward in a public hospital can cost up to S$13,444! It does not include other medical costs such as surgery and rehabilitation, and does not include opportunity costs such as loss of income and career prospects due to job loss.

Most accident plans cover medical expenses such as surgery and hospitalization and outpatient bills. Some plans cover additional expenses such as mobility and prosthetic payments and personal responsibilities.

Personal Accident Insurance Plans Protect Your Family’s Financial Well-Being

Old man carrying baby or grandparent holding grandchild

An accident plan protects the financial well-being of your dependents by providing them with a lump sum or recurring payment in the event of an accident resulting in death or total permanent disability (TPD).

Losing a life so unexpectedly can be extremely painful for loved ones. It can also add stress to them if you are the sole breadwinner in the family, as they would face financial challenges to survive without a breadwinner, let alone maintain their current lifestyle. Having savings may also be insufficient to cover the long-term expenses of minor dependents such as children or even retirees who depend on their offspring to be their financial providers. Unlike death from slower causes, there is little to no preparation for the family to consider how to move on financially when faced with an untimely fate.

There are accidental death riders that provide an additional payment on top of the sum insured of your life insurance plans in the event of death caused by an accident. This extra coverage will ease the sudden preparation that loved ones face during an unexpected tragic event.

Some accident plans offer long term care insurance, which is less expensive and requires minimal underwriting. Payment will be made if the insured meets the criteria of needing assistance with three to five of the six Activities of Daily Living (ADLs) for more than 90 days. These ADLs include, but are not limited to, toileting/bathing, dressing, feeding, toileting/continence, mobility, and transferring from wheelchair to bed and vice versa.

These long-term care plans provide daily to monthly benefits to cover expenses incurred for TPD medical care due to an accident.

Some standalone plans can cover up to millions in sum assured in the event of death and PDT, or even more. Coverage can vary from personal finances and income level and underwriting to access risks such as occupancy.

Conclusion

We don’t want to be involved in an accident, but that doesn’t mean we should never think about what would happen to our loved ones if we did. Life is very unpredictable, but we can ease the pain as long as we plan for what we can prevent.

Now that you know what kinds of benefits personal accident insurance plans can have, you might want to compare which insurer offers the best plan for your needs! Check out this article on which accident plans are best for you, or get a quote of PolicyPalFA so that they provide you with the most suitable recommendation!

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