FAQ: Personal accident insurance

1. What are the main coverages under a personal accident insurance policy?

Most insurance companies offer the following coverages under its comprehensive plan (expressed as a percentage of sum insured):

Death: 100%
Double Indemnity on weekends, public holidays and school holidays: 100%
Permanent Disablement: up to 100% depending on extent of disablement (defined in schedule)
Temporary Disablement: up to 0.1% per day, up to 104 weeks
Medical Expenses: up to a specified amount for any one accident
Emergency Evacuation and Repatriation

2. What is an accident?

An accident is usually defined as being caused by an external, violent, unexpected event. This is intended to exclude claims for illness or poor health.

The standard policy will usually exclude the following:

pre-existing physical or mental defects
pregnancy and childbirth
war risks
motorcycling
climbing or mountaineering necessitating ropes or guides
judo, karate and some hazardous sports

You can pay a higher premium rate to cover some of these risks.

3. How much insurance should I buy?

You can insure for a sum insured presenting 5 to 10 years of your earnings. If you earn $30,000 a year, you can be insured for $150,000 to $300,000. The premium is quite low.

4. What is the cost of the insurance?

The annual premium for a sum assured of $100,000, based on a popular plan in the market, is (depending on occupation):

Class 1: $72 (most office bound jobs)
Class 2: $92 (production and outdoor jobs)
Class 3: $127
Class 4: $209

It can differ by up to 20% depending on the insurance company.

You can select a higher or lower sum insured, and pay a proportionately adjusted premium.

5. Can I pay a lower premium for a basic plan?

You can buy a basic plan that covers death and permanent disability covers (i.e. excluding temporary disablement and medical expenses). The premium is about 30% to 50% lower than a comprehensive plan.

6. What happens if I change my occupation?

If you change your occupation, the premium rate will be adjusted on the following year's renewal.

7. Can I buy accident insurance as a rider to a life insurance policy?

The premium rate for an accident insurance rider (taken with a life insurance policy) is usually more than two times of the premium for similar coverage under a standalone policy. It is better to buy personal accident insurance under a standalone policy.

8. Is it advisable for me to cancel my accident rider and take up a standalone policy?

It is advisable to make a switch, if you can have a significant saving in premium. You should find out the cost of the standalone policy, compared to the rider, before you make a firm decision.

As the accident insurance rider does not have any cash value, you will not suffer any hidden loss when you make a switch.

9. What are the occupations listed in each class?

Class 1: Profession of administrative, supervisory or clerical nature such as accountant, lawyer, banker, doctor, teacher, nurse, secretary, clerk.

Class 2: Professions of outdoor nature, work involving overseas travel or whose duties involves the occasional use of tools or machinery such as foremen, grocers, hairdressers, salesmen, tailors, surveyors, tourist guides.

Class 3: Profession involving manual work or use of tools or machinery, such as carpenter, builder, painter, driver, technician, hawker, unarmed security guard.