Definition: Accident insurance is a type of insurance that pays only when the insured person dies or suffers injuries due to an accident. Accident insurance pays benefits if you are injured or die in an accident. This type of insurance typically does not cover healthcare costs related to illness, nor does it pay death benefits when the insured dies from natural causes.
Understanding Accident Insurance
Unlike life insurance, accident insurance typically does not require risk assessment. This means you can enroll in the coverage provided in a group plan or purchase a personal policy without undergoing a medical examination.
What Accident Insurance Covers
Accident insurance covers accidental deaths and a wide range of injuries that may include:
- Concussion
- Dislocation
- Amputation
- Eye injury
- Fracture
- Wound
- Herniated disc
- Severe burns
- Knee cartilage tear
Benefits of Accident Insurance
If you are disabled in a covered accident and unable to work, accident insurance can help replace your income. Accident insurance can also cover other expenses such as:
- Alternative treatments
- Ambulance services
- Psychological counseling and therapy for grief and trauma
- Emergency room services
- Hospital admission fees
- In-hospital rehabilitation
- Medical devices
- Medical examinations
- Some types of surgery
Exclusions
Like all types of insurance, accident insurance comes with exclusions. For example, the policy might not pay if the insured person is injured while under the influence of alcohol or committing a crime. Policies may also exclude injuries that result from a pre-existing illness.
Payments
If the insured person dies due to a covered loss under accident insurance, the insurance company will pay 100% of the principal amount of the policy. For example, if the insured holds an accident insurance policy worth $500,000 and dies in a car accident, the beneficiary will receive $500,000. However, accident insurance pays a lower percentage for other types of injuries. For example, if you lose your hand in an accident, the policy might pay 50% of the principal amount; if you lose your index finger, it might pay only 25%.
Family Coverage
Some accident insurance plans allow you to add a spouse or partner and dependent children. However, the policy may provide full coverage only for the policyholder. For example, the policy may offer 50% coverage for domestic partners and spouses and 15% coverage for each dependent child.
Cost of Accident Insurance
Based on the insurance company or employee benefits plan, you can usually purchase accident insurance in increments of $10,000 to $50,000. Coverage is generally very affordable. For example, some employer-offered accident insurance plans provide individual coverage of $50,000 for only $1.25 per month and family coverage of $500,000 for about $17.50 per month.
Do I Need Accident Insurance?
Since accident insurance is often affordable, purchasing it is something to consider. However, some individuals and families are particularly encouraged to carry accident insurance, including:
- Those without sufficient health insurance
- Families with a single breadwinner
- Families with young children
- Active lifestyle individuals
- People with a limited budget for unexpected medical expenses
Other Important Coverages
Accident insurance is considered a type of supplemental insurance, and since it pays only when you are injured or die in an accident, it does not provide all the protection you need. You may also want to consider purchasing disability, life, and health insurance policies.
- Disability Insurance: Disability insurance helps replace a portion of your income if you are unable to work due to illness or injury. You can purchase short-term disability coverage, which can cover disabilities lasting up to two years, or long-term coverage, which can pay benefits for life.
- Life Insurance:
- Life insurance: Life insurance pays a death benefit to one or more beneficiaries upon the death of the insured, even due to natural causes. You can purchase life insurance for a specified term or for lifetime coverage.
Health: Health insurance provides a broader range of benefits. With this type of policy, after paying the minimum out-of-pocket expenses, the insurance company covers part of your healthcare costs. Health insurance policies typically cover expenses such as emergency services, hospital stays, maternity and infant care, laboratory services, mental health services and substance abuse services, child care, and preventive services.
Conclusion
According to the Centers for Disease Control and Prevention, emergency departments treated nearly 98 million unintentional injuries in 2018. Injuries are the fourth leading cause of death, resulting in nearly 201,000 deaths annually.
Purchasing accident insurance makes a lot of economic sense, especially if you have loved ones who depend on your income. It is affordable, does not require a medical examination, and is readily available through insurance companies and many employee benefit plans.
Source: https://www.thebalancemoney.com/what-is-accident-insurance-5219880
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