Tuesday, June 25, 2013

Beginner’s guide to personal accident insurance

YOU might have heard of personal accident insurance — but is it worth getting one such policy? What differentiates it from Socso and life insurance coverage?

Personal accident (PA) Insurance is an annual policy which provides a lump-sum compensation in the event of injury, disability, or death caused solely by violent, accidental, external, and visible events.

Unlike life insurance (which covers any type of death), PA coverage is completely policy dependent. It pays a benefit due to death — which helps to protect loved ones against the inevitable devastating loss of income that will occur if the policy holder dies unexpectedly.

Premiums for PA policies are also generally cheaper than that for life insurance, due to it being a more restrictive policy.

While PA insurance is a good way to protect your family and dependants; note that it does not cover death by natural causes. If such things concern you, it might be a good idea to augment it with a life insurance policy.

PA Insurance can either be taken for yourself or a group policy for your family; 24-hour worldwide coverage is also provided.

How diferent is it from Socso coverage?

The Social Security Organisation (Socso) in Malaysia provides insurance coverage against job-related injuries and disabilities, workplace accidents, occupational diseases and death.

In short, this scheme only provides protection to employees who suffer from an accident or an occupational disease arising out of, and in the course of, his employment.

It covers accidents while at work, accidents while travelling, accidents during emergency situations, and diseases caused by the nature of work.

One might think that this is enough. However, accidents can happen anywhere and anytime.

While your job-related activities are covered by Socso, payouts such as the disablement benefit and disability pension are limited to under RM3,000 a month. How confident are you that you will remain accident-free elsewhere, or that the sums provided by Socso as being compensation be enough for your dependants? PA Insurance helps to add to that degree of assurance, no matter the place, time, and amount.

Where can I get a PA Insurance?

In the past, PA policies were purchased directly from insurance companies. These days, they underwrite policies which are then distributed by the big banks (many of them being related companies), Pos Malaysia and even telecommunication companies like Maxis, Digi, Celcom, and the Tune Group.

How much does it cost?

The cost of a PA policy depends on several factors such as the length of coverage, compensation, additional coverage on exclusion, your age (the premium can often rise with age), occupation (Class 3 jobs have a higher risk than Class 1 and 2), what activities you normally do, your health history and the number of people who benefit (beneficiaries).


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