• Accident benefits have listed exclusions to consider

  • Schedules of disablement benefits can differ

  • Medical Expenses benefit may not be necessary

  • Temporary Disablement cover pays weekly cash amounts

Different from Life insurance that pays a death benefit regardless of cause, except suicide in first two years, accident insurance plans cover death or disabilities related only to accidental causes. Thus incidents related to illness (medical cases) would not be covered. And accident policies do have some standard exclusions such as hazardous pursuits or occupations, flying other than as a fare-paying passenger on a scheduled airline, war or act of war, self-inflicted injury and others. Many of the exclusions can be deleted through negotiation and payment of a higher premium. Accident policies can be purchased with a life policy (called often double indemnity) or separately from a General Insurance Company. Maximum limit of cover offered by rule of thumb is 10 to 20 times annual earnings which is the same limits governing the Life Insurance maximums as well.

Accident insurance comes in four basic modules of coverage that are:

1.  Accidental Death - Fixed amount of cash benefit to beneficiary for death of insured.

2.  Permanent Disablement or Dismemberment - Disablement commonly offered by European or UK firms cover loss of and/or loss of 75% use of limbs or body functions. Most American firms offer dismemberment benefits that require actual severance or total loss of the limb or body function. Disablement is more liberal.  All policies include a printed disablement schedule of listed disabilities and their corresponding limit of benefit based on the severity of each versus the others.

3. Medical Expense Reimbursement - Usually limited to 10-20% of Death benefit, the MR coverage pays for In and Out-patient medical care received as a result of a covered accident. Many people who have separate ample medical insurance will not need such MR cover in their accident policy.

4. Temporary Total Disability - TTD weekly cash payments are made to policyholders who, as a result of an accident, can no longer work. The limit is set at a maximum of 75% of normal weekly salary or wage. Included with TTD can be Temporary Partial Disability (TPD). Policy term is commonly for 52 weeks and can be arranged for 104 weeks.

It is important to read the listed policy exclusions when purchasing Accident insurance.  Many will include Murder and Assault cover without additional premium and some do not. Also watch for exclusion of Acts of God or Perils of Nature. I find policies excluding such losses a bit inferior to others that include them.