Personal Accident Insurance

Looking for cover if you’re injured or ill and out of work? Personal accident insurance could be the answer.

Compare personal injury life insurance cover

Personal accident insurance can provide you with financial cover when you’re out of work and need it the most. Choosing the best cover is easier said than done as there are several policy options to choose from. Read more about ins and outs of personal accident insurance and how you can compare your options here.

What is personal accident insurance and how does it work?

Personal accident insurance is specially designed life insurance cover to provide you with the financial support you need if you’re involved in an accident and can’t return to work temporarily or permanently.

When choosing personal accident insurance, you can take out cover in a larger income protection insurance bundle or as a standalone policy. The benefit of taking it out as a bundle is that your policy will be more extensive and provide cover for a range of illnesses in addition to injuries.

Depending on the type of cover you take out, you can receive your benefit amount as either a lump sum or through fortnightly or monthly repayments. Your benefit amount can be up to as much as 85% of your income.

To make a claim on your personal accident insurance, it’s important you get in contact with your insurer straight away to be begin the process. For your claim to be approved, you’ll be asked to supply various documents including:

  • Doctor’s certificate or medical statement.
  • CT scans or x-ray scans which prove your injury.
  • Proof of ID such as driver’s license or passport.

What types of personal accident insurance can I choose from?

Personal accident insurance can be taken out as the following types of cover:

Standalone personal accident insurance

includes injuries as a result of accidents such as fractures, loss of limbs or burns. Paid out as a lump sum.

Income protection insurance

provides cover for injuries or illnesses which temporarily prevent you from returning to work. Benefit is paid in fortnightly or monthly repayments

Total and permanent disability (TPD) insurance 

covers situations of total and permanent disablement from serious injuries or critical illnesses. Benefit is paid as a lump sum payment.

Accident-only income protection insurance 

injuries as a result of an accident which temporarily prevents you from going to work are included. Your benefit is paid in fortnightly or monthly payments.

What is covered by personal accident insurance?

Inclusions featured in your personal accident insurance will vary based on the type of cover you take out. You can opt for cover which will provide financial support if you’re out of work due to injury, illness or both. Moreover, optional extras for your cover can include disablement benefits, business expenses cover or death benefits. 

You can be covered for injuries sustained from a range of situations including tripping over a roadside kerb or falling off a ladder in your backyard. To understand the inclusions in their entirety, make sure you read your policy’s Product Disclosure Statement (PDS).

Depending on whether you take out a standalone personal accident insurance policy or cover as an extensive income protection package, your inclusions can include an array of injuries or illnesses including the following:

Standalone personal accident insurance What this might include An example of this injury might be...
Fractures

Whether you fracture bones in your arm, leg, back or face, you’ll be covered under your standalone personal accident insurance policy

If you topple off a ladder at home and fracture a bone in your forearm attempting to break your fall

Dislocations

You could dislocate a shoulder, knee, ankle or finger which keeps you out of work. Any of these injuries would be covered.

You could dislocate a shoulder, knee, ankle or finger which keeps you out of work. Any of these injuries would be covered.

Loss of limbs

If a confronting accident occurs and you lose an arm or leg, you will be covered.

You might be involved in a serious car crash which results in loss of limbs.

Loss of sight

Should you lose sight in one or both eyes and be out of work, personal accident insurance will cover you.

A freak accident whilst gardening or tripping over could result in a severe eye injury.

Bundled income protection package inclusions:

  • Stroke – the likelihood of suffering a stroke increases as you get older. An income protection package will give you the financial support you need while you’re in hospital or at home on the road to recovery.
  • Cancer – can include cover for benign or malignant tumours. As you grow older, you might be more susceptible to various forms of cancer which may keep you out of work for a short or long period of time.
  • Heart conditions – whether it be cardiac arrest, coronary artery disease or a heart attack, a heart condition may keep you out of work for an extended period of time. The benefits of an income protection package will give you time to get back on your feet and recover.
  • Paralysis – a severe car crash or fall from height whilst gardening could result in paralysis. This would be a scary time for yourself and your loved ones. The money provided by an income protection package in this time will ensure there’s one less thing to worry about.
  • Dementia – although you might still be able to work with early signs of dementia, once the disease progresses you will no doubt be out of work and without an income. An income protection package will support you and your family’s finances through this difficult time

What’s excluded under personal accident insurance?

What’s not included in each personal accident insurance policy may vary, but there are common exclusions which apply to most policies. These include:

Pre-existing health conditions.

Pre-existing conditions which are known before the policy was taken out will be excluded. This will also prevent you from getting cover after you’re injured or fall ill and then make a claim.

Birth or pregnancy related injury or illness.

Claims related to pregnancy, birth or resulted complications won’t be covered. For example, you won’t be covered if you or your partner is out of work due to a serious and extended bout with morning sickness.

Drugs and alcohol.

If you were under the influence of either drugs or alcohol when you were injured, you won’t be covered.

Mental illness.

Claims relating to mental illness will not be covered.

Criminal acts.

If you suffer an injury or fall ill from a criminal act, you will be excluded from cover.

What’s the difference between workers compensation insurance and personal accident insurance?

There are a number of differences between workers compensation insurance and personal accident insurance in terms of how they function and can help you financially. Here’s how they vary:

Workers compensation insurance:

  • Usually applied by your state or territory government.
  • For businesses employing staff it’s a compulsory requirement which covers workers for injuries or illnesses sustained at work. It’s important to note that company owners are usually exempt from this cover.
  • Depending on your state or territory, workers compensation insurance may or may not be available through an insurance company. E.g., Workers compensation insurance in NSW, Victoria, Queensland and South Australia are government owned and operated, while it’s carried by licensed insurers in Western Australia, Northern Territory, Tasmania and the ACT.
 

Personal accident insurance:

  • Unlike workers compensation insurance in some states, personal accident insurance is taken out by an individual through an insurance .
  • Depending on your type of cover, it can insure you for up to 85% of your income if you’re injured or ill and can’t return to work.
  • Can be purchased as a standalone policy which has less comprehensive cover or as a bundled income protection package with more comprehensive cover.
  • Compulsory for self-employed workers in certain jobs before they step on a work site.
  • Covers your own income and not that of your employees.

How do I compare personal accident insurance cover?

Looking for personal accident insurance? Find out how to best compare your options to get the right cover for you.

Pros and cons of Personal Accident Insurance

Weighing up your personal accident insurance options? Here we consider the pros and cons to help your decision.

PROS

Provides financial support

Taking out personal accident insurance will ensure you get the necessary financial support if you are temporarily or permanently unable to return to work.

Allows you to focus on your recovery.

If you’re injured or ill and out of work without an income, you may rush your recovery to get back to work. Personal accident insurance will replace your income and allow you to focus on your health.

Peace of mind

When you’re physically and emotionally strained, the last thing you want to worry about is your finances. Taking out personal accident insurance will give you, your partner and your family peace of mind. You can find comfort in knowing that your finances are protected and you can continue to pay for things like medical expenses, living expenses or a mortgage.

CONS

Subject to waiting periods

Like many forms of insurance, your personal accident insurance will be subject to waiting periods before you can make a claim on your cover. This period is often anywhere from two weeks to three months, and if you try to make a claim during this period it will be rejected.

Restricted to certain age requirements.

All personal accident insurance policies will have age restrictions in place. Under many policies, once you reach the age of 65 you will be charged extra every year which follows.

Benefit period restrictions.

When you make a claim, the maximum benefit period for which you will receive fortnightly or monthly payments is either two or five years. This period will differ between insurers

 

Top tips for when you apply for personal accident insurance

Need help choosing the best personal accident insurance policy for you? Follow these tips.

Calculate the amount of cover you will need if you’re out of work for an extended period

If you’re injured or ill and out of work, you don’t want to be struggling to get by with a minimal benefit amount. You need to make sure your cover will comfortably support you if something does go wrong so you don’t have to concern about your finances.

Prioritise extensive cover

You never know what situation could lead to an accidental injury or illness. Any range of activities at home, work or simply out and about could result in an injury. It’s vital that your injury or illness is covered, and you are not left regretting your choice of personal accident insurance cover.

Take out cover with a five-year benefit period

If you are injured or seriously ill and require benefit payments to get you by, you want these payments to last as long as possible. Make sure you choose a policy which provides a five-year benefit period as opposed to a lesser two-year period.

Consider cover with a shorter waiting period

The shorter the waiting period of your cover, the quicker you’ll be able to make use of your cover in the event of injury or illness. Waiting periods for personal accident insurance may range from two weeks to three months.

Frequently asked questions about personal accident insurance

Still have questions about personal accident insurance? Find the answers here.

Is it necessary to buy personal accident insurance?

Certain lines of work, such as working a trade, may require you to take personal accident insurance before stepping on the work site. This is especially relevant to sole traders are they are not eligible for workers compensation insurance. Even when it’s not compulsory, if you were to be injured and out of work for an extended period, would you be able to support you, your partner or your family? If not, you should definitely consider personal accident insurance. Despite your injury, life doesn’t stop, and the medical expenses, living expenses and bills will continue to roll in.

How does age impact the cost of personal accident insurance?

Every personal accident insurance policy contains age limits which will restrict or increase the cost of your cover once you reach the age of 65. As you grow older and more prone to accidental injury or illness, certain insurers may opt to reduce your cover’s benefit amount.

Will my personal accident insurance cover me for injuries or illnesses sustained overseas?

Cover for injuries or illnesses sustained overseas will vary between insurers. In most instances you will be covered but it’s important you check with your insurer or read the PDS.

How long does it take for a claim on personal accident insurance to be processed and approved?

Processing times will vary between insurers but once you have supplied all the required documents, your claim could be approved within a few days to a week.

Can my personal accident insurance premium be tax deductible?

Personal accident insurance may be tax deductible depending on the type of cover you have. If your personal accident insurance is through income protection insurance, it can be tax deductible. However, your personal accident insurance will not be tax deductible if you take out your policy through super or have your benefit amounts paid as a lump sum.

How I get the best personal accident insurance quote?

To get the best personal accident insurance quote, you should try to explore your options broadly and consider both the premium and financial coverage of your policy options. You can compare your options with a range of insurers online with Savvy.