When we say insurance, what comes to mind first? Life insurance? Health insurance? You may wonder, “Since there are so many products from different insurance companies, how can I get the right one for myself and my loved ones?” When we are young, it’s easy to think that we don’t need to buy insurance to cover risks in our lives – believing that everything will work out somehow.
In fact, it’s best to try to buy insurance when we are young and healthy, as this usually allows for a cheaper insurance premium and more simple underwriting process. Moreover you have the comfort of knowing that you have at least some financial assistance should an unfortunate event occur.
Now, let’s talk about personal accident (PA) insurance, compared to other insurance types such as life insurance and health insurance. PA insurance is generally less understood and most people think that it is not essential, having the misconception that it’s just for those in risky jobs.
What is PA insurance? PA insurance is a type of general insurance that provides financial support to policyholders should an unfortunate event occur. There are two types of payouts in PA insurance, lump-sum payout and reimbursement basis. For a lump-sum payout, it is based on the type of injuries sustained. For reimbursement basis, it is based on the medical expenses incurred. Also, under PA insurance, you are covered on a reimbursement basis depending on the coverage limit for hospital, surgical or even Traditional Chinese Medicine (TCM) costs incurred after an accident. In contrast with life and health insurance, the premium is generally more affordable, based on the coverage limit.
Differences between PA Insurance, Life Insurance and Health Insurance
*May differ depending on policy and product provider
Claims can be made in for relatively small matters such as being bitten by mosquitoes carrying the Zika virus, food poisoning and injury falls. It’s also possible to make larger claims where death or permanent disability are causing a financial strain on a family.
For those who are asking, ‘But, I have health insurance which covers the cost of hospitalization and surgery – Why do I need to buy PA insurance?’ A PA plan is designed to complement your existing health insurance. It helps to provide for some of the out-of-pocket expenses that can arise from these treatments. For example, a minor accident which does not leave you hospitalized may still require x-rays and MRI scans as well as other follow-up treatments. This is where PA insurance comes in for outpatient treatment.
PA insurance is especially useful when:
- You are exposed to higher physical risks
If your occupation or lifestyle expose you to physical risks, it’s necessary to get PA insurance. For instance, if you commute by motorcycle or ride your bicycle or electric scooter on the road, PA insurance can provide you a financial safety net for unforeseen events.
- You want to put in place a financial safety net for your family
If you are the breadwinner in your family, your death or disability may be financially disastrous for your loved ones. Also, being out of job while you recover from an accident could mean a loss of income. Having PA insurance as part of your financial plan can help to mitigate these financial consequences.
- You are a senior citizen
As we age, it becomes increasingly important that we don’t dip into your retirement savings to cover incidental costs. With PA insurance in place, your nest egg will be that much more secure.
In conclusion, there is no such thing as at best insurance plan. There is only the right insurance plan for the individual. This means you should focus on sufficient coverage for the right reasons at the lowest cost. Before deciding to purchase insurance, ask yourself 3 key questions.
#1 Am I already insured?
#2 What coverage do I need?
Then, have a good discussion with your Unicorn Financial Planner as to what is the best overall plan for you.
Author: Yap Zhao Chun (Zac Yap)