In this age of natural disasters, fatal accidents and economic crises, it shouldn’t come as a surprise that those feeling insecure are turning to insurance for financial protection for them and their loved ones. Insurance can be a fantastic safety net should the worst happen, however it can be quite complicated and difficult to understand.
It can be confusing at times with all the technical jargon such as ‘pre-existing conditions, annual and lifetime benefits, limitations/exclusions and insured interest.’ One of the most common questions our Customer Service Team at EZTakaful receives is ‘What is the difference between Life vs. Personal Accident Insurance?’
Well you’re in luck, this week’s EZTakaful blog is going to answer that question right here, right now!
But first…what is insurance?
Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for money. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Simple right?
The tricky part comes when faced with all the insurance products available in the market, knowing what the differences are and which cover best fits your needs.
Life Insurance
Life insurance is relatively straightforward. Life Insurance pays benefits upon death, helping the insured to protect their loved ones against the loss of income that might occur upon death. If you die while your policy is in force, the insurer will pay the death benefit to your beneficiaries, assuming that the cause of death was not as a result of an excluded cause of death, such as suicide. If you’ve purchased enough cover, the death benefit should pay your funeral costs and estate taxes, and leave your family with the resources to maintain their lifestyle and succeed in life as you would want them to.
Personal Accident Insurance covers your financial losses resulting from an accident or disability caused by an accident. For example, in the event of suffering a fractured leg from a car crash, an accident policy will not heal your leg back to its original healthy state. It can however cover the financial losses you might suffer as a result of losing your mobility, suffering a disability that affects your earning capacity or even loss of work arising from your accident.
Additionally, almost all personal accident policies cover death by accident. They pay out a lump-sum death benefit, as life insurance does, in the event you’re killed accidentally or die later as the direct result of an accident, ensuring your family will not be affected financially.
What are the benefits of having a personal accident insurance plan?
- A basic plan will cover against both death and disability due to an accident.
- The policy covers all kinds of accidents, whether major or minor, ranging from falling off a bicycle to getting hit by a car.
- In most policies the cover can be further enhanced to give you extended protection. It can provide cover against partial, temporary or full disability.
- Some policies even cover the loss of livelihood. The insurer will pay you a sum every week in accordance to your plan if the disability makes it impossible for you to go to work.
- If you are admitted to the hospital due to the accident, it can come with hospitalisation benefit in the form of medical expenses reimbursement, daily hospital income, family allowance and post hospital treatment allowance.
- The monthly contributions of a personal accident insurance plan are relatively low, compared to a life insurance plan.
In short, personal accident insurance is cost efficient and covers areas which a life insurance policy doesn’t, such as partial permanent disablement. So while you need a life insurance policy to cover the risk of death, it is highly recommended that you have an accident plan as a safety net against disability and medical expenses.
We strongly recommend protecting yourself and everyone you love with Takaful EZCover, EZTakaful’s very own personal accident insurance plan that pays a cash lump sum up to RM500,000 for accidental death or disability. With options to suit all lifestyles and budget, no medical examinations and cover from ages 18-70, it really is a no brainer!
Enrol online or call us now on 1300 30 3001!
With the festive holiday season upon us next month December will be ‘Holiday Month’ on the EZTakaful Blog. Stayed tuned as we discuss topics such as best local holiday destinations for the family and fun and free activities for bored children.
Happy Reading!