Accidents are unexpected, unpredictable and may sometimes have a dire life-changing effect on you and your family. A serious accident can leave you and your family in major financial crises especially if you are the sole breadwinner or a major contributor to your family’s financial needs.
This is why personal accident (PA) insurance is important for you and your family. It takes up the entire financial burden that is brought by the accident and makes sure that your family is taken care of if the accident is fatal.
What is Personal Accident Insurance (PA)
Personal Accident Insurance (PA) is defined as an annual policy that offers compensation in the event of an injury, disability, or death caused exclusively by violent, accidental, external and visible events.
Different insurance companies determine the meaning for ‘violent, external and visible events’ but it must be determined that the result of the unfortunate event was out of your control, otherwise the insurance company will not pay.
Personal Accident Insurance Different Classes
If you want to purchase a Personal Accident Insurance cover, you will realize that there are categories and classes that policyholders are placed depending on their occupation and risks. Each insurance company has a unique method that it uses to classify the various occupations and related risks.
Here is a general classification method of the occupations:
- Class 1
For occupations that involve non-manual activities such as administrative, managerial and clerical work.
- Class 2
This is for occupations that involve sales, marketing, supervisory work and duties that include traveling. They should not be involved in manual labor or the use of tool and machinery.
- Class 3
These are for persons involved in manual labor that is not particularly hazardous in nature but requires the use of tools and machinery.
These classes are important to both the insurer and the potential customer.
For you as a potential customer, the classes will help you determine the plan that best suits your needs whereas the insurer is able to determine the risk that is associated with each occupation thereby advising the customer accordingly.
Personal Accident Insurance Coverage and Exclusions
The coverage of a personal accident insurance plan varies from one insurer to the other so, before purchasing a PA plan, make sure that you take your time to read and understand the fine print to ensure that it meets your needs.
In most PA plans the types of coverage include:
- Accidental death: – The coverage amount that is paid to your closest family member in case you die in an accident.
- Funeral expenses: – The amount that your insurer will pay for your funeral expenses if you die in an accident.
- Medical expenses: – Your medical expenses in treatment and services of injuries and disabilities you get from an accident.
- Permanent Total/Partial Disablement: – You receive a cash payout in case you can no longer work or perform basic tasks following an accident.
- Temporary Total disablement: – You receive cash compensation if you temporarily cannot work due to a permanent disablement.
- Hospitalizations benefits: – These are cash benefits you receive when you are admitted to a hospital following an accident.
- Repatriation benefits: – In case you need to seek medical care in another country your insurer caters to your travel expenses.
In case you find this basic coverage insufficient, you can also opt to buy additional coverage to increase your cover:
- Double Indemnity:-That covers death that happens when using public transport which is normally twice the amount of accidental death coverage.
- Personal Liability: – It covers you in case you are forced to pay for another person’s property damage or injuries.
However, Personal Accident cover excludes injuries, disabilities, and deaths caused by the following factors:
- Self-inflicted injuries
- Involvement in unlawful activities
- Dangerous sports and activities
- Riding motorcycles
- Pre-existing physical defects and infirmity
- Provoked murder and assault
Also, PA insurance does not cover people in certain occupations that may be termed as hazardous including law enforcement officers, race car drivers, aircraft testers, fishermen, pilots, and aircrews, or those involved in high-risk recreation activities including bungee jumping, scuba diving, rock climbing, and skydiving.
It is vital that you check with your insurer or your agent on what they do and do not cover before you proceed with purchasing a policy.
How Personal Accident (PA) Insurance Works
Personal Accident Insurance cover is designed to provide a lump sum amount to the policyholder for the all the expenses related to the accidental event. This means that if an accident happens and the policyholder either dies or is disabled, his/ her PA Insurance provider will offer a huge sum of money which will vary depending on the amount of premium paid on all the respective coverage.
The PA also covers your medical expenses if you are being treated for an injury caused by an accident up to a certain amount. If the injury is serious and requires you to be transported for treatment to another country, your PA will also pay for your repatriation expenses.
Types of Personal Accident Insurance Plans
Personal Accident Insurance is commonly divided into five types:-
|Individual Plan||Covers the policyholder|
|Couple/Partner plan||Covers married couple|
|Children Plan||Covers the children of the policy holder|
|Family Plan||Covers the family members of the policy holder|
|Takaful||A cooperative policy where participants contribute funds through donations.|
It is important to note that every insurance company has its own designed plans that cater to specific groups of people. Some insurers even have a special PA Insurance plan that is designed for full-time students. You should, therefore, take your time to check with your insurance provider the best plan that suits your situation.
What do Insurers Require to Approve Personal Accident Insurance Policy?
Applying for a Personal Accident Cover is quite easy though there are some few things that will determine whether your policy application gets approved or rejected. They may also decide the amount that you will be required to pay on your premium. Make sure that you include all these details correctly and truthfully.
- Medical history( In case you have a pre-existing illness, have undergone surgery, or use prescription medicine)
- Your family’s(Immediate) medical history
- Lifestyle habits(Drinking, smoking, drug use, regular traveling, hazardous hobbies)
There also things that can not only affect your PA Insurance application but can also land you in trouble with the police and also make your policy void. These are the things that you should completely AVOID doing.
- Misrepresentation- by providing false and misleading information
- Fraud- faking your own death
- Concealing of material facts- by withholding important information
How to Make an Insurance Claim
Making a claim in Malaysia may differ from one insurer to the other since not every insurer requires the same documents and forms. So it is important to fast check with your insurer before so that you don’t get disappointed and frustrated afterward.
Also, every situation such as Intensive Care, Disablement, and Death has its own set of procedure to follow. However, these steps are common to almost all the situations.
- Notify Your Insurer as soon as possible
- Obtain a claim form and give full details of the accident, and injuries/situation
- Submit the form and other necessary documents like a police report, medical reports, medical bills, death certificate and postmortem report(if the accident was fatal) etc
Terms That You Should Know
Like I said before, you should make sure that you read and understand your policy form before embarking to sign and thereby committing yourself to a policy.
In all insurance product disclosure sheets, there is a section with “Key Terms That I Should Know” that contains all the important information about your policy in regards to payment and documentation. You will find details on terms such as:-
- Importance Of Disclosure-A policyholder has a duty to disclose all the necessary information accurately and truthfully including updates to any new information e.g. job changes
- Scale Of Benefits- This is the amount that will be paid by the insurer to the policyholder for certain types of claims such as the loss of a limb because of an accident.
- Notice Of Claim- This is notice that is written to the insurer within seven days after getting a notice of or sustaining any accident, loss, or damage.
- Cash before Cover- Means that the policy will only be effective after the premium due is paid.
- Premium Warranty- The policy is canceled if the full premium is not paid within 60 days from the beginning date of the coverage.
- Coverage Options- These are add-ons that enhance the Personal Accident Insurance coverage.
- Couples- Refers to married couples with marriage certificates.
How to Apply for a Personal Accident Insurance Cover
While it is not easy to select the right personal accident cover, it is something that has to be done with care. Most people in Malaysia opt for the face to face approach where they meet and talk with the insurance agent. This is an effective and personal approach but will require you to set aside time to book an appointment and meet the agent which may inconvenience some people.
You can also opt to go the digital way and apply online.