What is accident insurance and what does it cover?
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Accident insurance helps you get through a sudden injury by offering a monetary payout with flexible uses. Unlike medical payments insurance (medpay), accident insurance is not a form of auto insurance. Accident insurance doesn’t technically fall in the same category as health or disability insurance plans, either; there are actually quite a few distinctions to be aware of before choosing the right policy for your needs.
You can find your own policy directly through an insurance company, or see if your employer has a group accident insurance plan to enroll in. For non-auto related accidents, this type of insurance can round out your insurance products and provide extra protection for those who need it most.
What is accident insurance?
According to the National Association of Insurance Commissioners, accident insurance is an insurance policy for an unexpected bodily injury. It’s a type of supplemental insurance that covers accident-related costs that aren’t covered by your health insurance or disability insurance plan.
In order to receive coverage, you’ll pay a premium in return for a set amount of benefits when a qualified event occurs. In most cases, rather than paying a healthcare provider like health insurance does, you’ll receive the payout directly. This usually takes the form of a lump sum based on the type of injury. Your plan will likely come with a cap as to how much is paid out and how many claims you can make throughout the life of your policy.
What does accident insurance cover?
Personal accident insurance differs from health insurance in that the funds aren’t restricted to only covering medical expenses; you can use the benefit money for anything you need. It may help you pay for uncovered medical costs, like your ambulance ride or the amount you have to cover in order to meet your deductible. But the money can also be used for non-medical costs, like hiring extra childcare while you recover or for paying your rent and buying groceries if you can’t work.
Your policy will likely come with restrictions on how much you’ll receive and how frequently you can file a claim for a qualified accident. You might consider paying a higher premium in order to file more claims during a specific time period. This may be especially beneficial for large families or families with active children.
Here’s what you can expect to be covered in a standard accident insurance policy:
- Injuries (including burns, fractures, lacerations and concussions)
- Medical treatment and other out-of-pocket services
- Hospitalization costs
You can also use the benefit for general living expenses. Check your individual policy for how payout works. The benefit usually increases based on the severity of your injury.
What does accident insurance cost?
There are a variety of factors that contribute to the cost of accident insurance. As with many types of insurance, your age plays a major role — the older you are, the more expensive your plan will be. Accident insurance also has a deductible. Before you receive a payout, you’ll be responsible for this amount. Usually, your deductible amount is simply taken out of your benefit before you receive the funds. You’ll pay a higher premium for a lower deductible, or you can opt for a higher deductible in order to save money on your premium. Just be sure to choose your deductible level with care, and make sure that you can afford it before finalizing your plan.
Where to get accident insurance
There are two ways to get accident insurance. The first is with a personal accident insurance policy. Just like most other types of supplemental coverage, you can shop around at different insurers to find the best coverage and the best price.
The other option is to enroll in an accident insurance policy through your employer, if available. What is group accident insurance? Many employers offer this optional coverage as part of their benefits package. You may receive more robust coverage or a discounted premium through your employer. These policies are typically customized by your employer so check to see what type of coverage is actually included before you opt in. Plans are generally voluntary and the premium is deducted from your paycheck.
Accident insurance and other coverages
Accident insurance may seem similar to other types of policies you might already have or are considering. Here’s how it stacks up compared to disability insurance and health insurance.
|Accident insurance||Disability insurance||Health insurance|
|What it covers||Provides lump sum payout when a covered injury occurs||Replaces lost income when you can’t work because of a covered medical event||Covers doctors visits, hospitalizations and prescriptions|
|Pros||Flexibility with how to use the benefit funds||Receive a monthly benefit|
Both short-term and long-term disability plans available
|Lowers the cost of expensive medical visits and treatments|
|Cons||Limited number of times you can file a claim||Elimination period requires you to be disabled for a set amount of time before receiving benefits||Usually must pay a copay, deductible and coinsurance in addition to your premium|
Is accident insurance worth it?
Accident insurance could be a helpful financial planning tool for many people, especially with healthcare costs rising. In fact, a recent study revealed that 26% of families have a deductible between $3,000 and $4,999 while 23% have a deductible of $5,000 or more. Adding accident insurance can help cover those expensive costs when an accident occurs.
Check to see how accident insurance fits in with other policies you have access to. Alternatively, your employer may offer a group accident insurance policy that may cost less than purchasing a policy on your own.
- Accident insurance gives you a lump sum payout when a covered event occurs.
- Flexibility lets you pay for a range of expenses.
- A group policy may be available through your employer.
Accident insurance offers a financial safety net when a sudden injury occurs. Whether you’re unable to work or have expensive medical bills that you’re responsible for, this supplemental policy gives you plenty of flexibility in how you use the payout if a covered event occurs. Just be aware of any limitations that come along with your policy and how it differs from other policies you may have, like health insurance and disability insurance. Accident insurance can help you rest easy knowing you’ll have an extra benefit when the unexpected happens.