The importance of having personal accident insurance coverage

Income, Tis Thing Called Life

Many years ago, a rich man bought a total of 17 life insurance policies and he was paying about RM10000 per year which is enormous for those day’s money. Faithfully he paid for the installments every month.

The one day, he got involved in an accident and lost the function of one of his hands. He went and submitted the claims for disability insurance.

To his horror, partial disability was not covered in any of his 17 insurance policies. For all the money he had been paying, he got zero compensation. He became very bitter and publicly started campaigns that insurance companies are out to cheat people.

The reason was because he bought only life policies- that usually pay upon death, permanent disability, hospitalization or illness (usually under medical card and hospitalization add-on benefits). In the case of the man above, he did not purchase coverage for injuries sustained through accidents. Unfortunately, losing one of his hand will also affect his earning potential and quality of life.

Many people, and even insurance agents themselves are not aware that there is a difference between partial and permanent disability. Most life insurance cover permanent disability but not partial or temporary disability that renders the person incapable of working for sometime or on permanent basis. 

Examples of permanent disabilities (usually included as part of life policies):

  • Losing both hands
  • Losing both legs
  • Losing both eyes
  • Being permanently paralyzed

Examples of partial disabilities (not covered by a lot of life policy insurance, unless you include as a rider):

  • Lost of only one leg
  • Lost of one eye, for example due to industry accident
  • Lost of one hand or the function of one hand

In the event for any sole breadwinners, the family loses the main source of income with the sole breadwinner being unable to work or no longer that ‘marketable’. It is sad but this happens to a lot of families. And if it happens to other family members, it becomes a financial liability to the wage earner.

And those who are on freelance or temp jobs- without any SOSCO coverage will really need to get a personal insurance aside from a medical and hospitalization benefit. For those who cannot afford medical insurance (which the premium comes up to at least a few thousand per year), at least get a personal accident coverage.

A normal personal accident (PA)  non refundable premium only cost around RM100 to RM400 for coverage between RM100k to RM500k. That only amounts to about RM1 or so per day- which can’t even buy you a cup of teh tarik (milk tea) nowadays. For family cover there are probably discounts and for the elderly, when they suffered broken hips or bones as the result of a fall, some packages also provide coverage on that.

It’s even cheaper than the broadband subscription or electricity that you are paying for- but it insured your life and the life of your loved ones in case of an accident which involves:

  •  Most form of accidents
  • Inhaling poisonous gas- there was a reported case where 6 person staying in an apartment died after inhaling poisonous gases by a faulty refrigerator. One of them is the family’s sole breadwinner.
  • Being stung by hornets as reported in Sarawak recently- that is also consider personal accident
  • Being beaten up in unprovoked attacks- like suddenly being attacked by a road bully or a robber.

I am not an insurance agent- even though after learning about this, I am tempted to get a license to sell just PA. But then, I will probably buy from my friend.

A life insurance agent said that she will always sell PA whenever she sells a life insurance policy. This is because PA by itself is cheaper in premium and have higher coverage compared to an accident coverage rider attached to a life insurance policy. According to her, graduates who just come out to work usually pay about RM1200 or more to buy life and medical insurance. If the person can pay about RM1200 per year, what is an additional few hundred ringgit for an extra RM200k coverage on accidents? In case the person is not able to work, there is some compensation.

Every year, so many road accidents happen- and a lot of innocent victims are involved. Now, it’s not that you do your best to be careful in your life and you are safe. A car or lorry from the opposite direction can just suddenly lose control and swirl into the opposite lane, sometimes killing almost the entire family in the car. With the sole breadwinner gone, the survivor is left to grief the loss and with bills to pay.

We usually do not stinge when it comes to buying expensive shoes, technology gadgets, fine dining, etc. But when someone approaches us to discuss about insurance, we are so stingy to pay for that policy.

It’s important that if the unfortunate happens to us, our family member will not be financially burdened. If there is partial disability causing loss of income (current or potential), the compensation will help cover the difficult tough days ahead.

Disclaimer: The above is the general information provided- different insurance companies may carry different exclusion clauses. Therefore be sure to check and read your policy statement careful and ask if you are unsure. That goes for any form of insurance that you buy.

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