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October 2016  Volume 9, Number 10        

long term care

Personal Accident Policies Essential for Income Replacement

If you have only health insurance and life insurance, you might have a serious coverage gap.

Insurance helps people protect themselves from financial emergencies. Health insurance covers medical expenses and life insurance will take care of your family after you’re gone.

Unfortunately, if those are the only two insurance policies you have, you might not have enough coverage. Neither policy will protect your finances if you are injured, temporarily or permanently disabled or are killed in an accident.

A personal accident policy pays benefits when the insured is involved in a “violent, accidental, external or visible event.” It covers both minor and major accidents and provides an income if you are unable to work.

What It Does and Doesn’t Cover

The important thing to remember about personal accident insurance is it only pays benefits if the injury results from an accident. Most insurance companies define “accident” as a “sudden, unforeseen, involuntary event caused by external and visible means.”

If the accident occurs because of a natural cause or through negligence, the insurance company won’t pay the claim. Most policies also don’t cover accidents that occur at your house, such as a fall down a staircase. Nor will they pay a claim if the person is injured because of a suicide attempt, is participating in a hazardous sport or is injured during a war, civil unrest or because of a terrorism act. If you’re injured while committing a crime or while you’re on drugs or alcohol, the claim will be denied. However, some polices allow you to add certain conditions, such as injuries suffered through terrorism.

Depending on the policy you purchase, a personal accident policy can cover some or all of four major events:

  • Death due to an accident
  • Permanent total disability, such as loss of two limbs
  • Permanent partial disability, such as a loss of a thumb
  • Temporary total disability such as a bone fracture

How to Determine If You Need Coverage

If you are the sole breadwinner for your family, personal accident insurance will provide income replacement.

However, you might not need personal accident insurance if you have these types of coverages:

  • Term life insurance – will provide funds to your family if you pass away
  • Health insurance – helps with hospitalization costs
  • Savings – If you have enough money set aside, you may be able to cover expenses during a temporary disability

Personal accident insurance can be a great help if you or a loved one suffers a permanent total or partial disability.

How to Purchase Coverage

Some experts advise people to have at least five times their annual income or at least the same amount of coverage that you have for term life coverage. The best way to determine how much coverage you need is to ask yourself the following questions:

  • How much will I need to maintain our lifestyle?
  • meet our financial goals?
  • cover expenses for treatments not covered by insurance, such as home health nurse expenses?

If you have term life insurance, you may be able to add an accidental disability rider to the policy. Remember, though, if you cancel your term life insurance, you also will be canceling your accident insurance.

The amount you pay in premiums depends not on your age, but on how risky your job is. A construction worker will pay more than an attorney, for example. The highest risk occupations include mining, electrical installation and working as a mountaineer or rafting guide.

How to Make a Claim

You will need certain forms to file a claim on your personal accident insurance policy. They include the claim form, a police report or death certificate, a medical certificate, and a leave certificate from your employer if you are unable to work.

For more information, please contact us.


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In this issue:

This Just In...

How to Cope with Health Insurance Cost Increases

Personal Accident Policies Essential for Income Replacement

Life Insurance Benefits Beyond the Obvious – Part II: How to Make Riders Work for You

Presidential Candidates’ Views on Healthcare


The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2016 The Insurance 411. www.theinsurance411.com Tel. 877-762-7877.