It is not uncommon to find people who believe that health insurance is enough. While health insurance is mandatory in Singapore, it may not be comprehensive enough.
For instance, it might only cover the costs that arise from hospitalisation in case of accidents. However, Personal Accident plans cover much more and can provide much needed financial assistance in times of crisis.
Personal Accident Insurance is complementary
An accident can prove to be detrimental to your livelihood. This is especially so if you are rendered disabled by an accident.
In the unfortunate event that your are left unable to work after an accident, you will not be able to support yourself or your family.
Personal Accident Insurance (PAI) comes with a range of benefits that include the provision of outpatient cover. Interestingly, this is not included in your health insurance policy. Further, a policyholder can rest assured that even in permanent disability, there will be stable income.
This type of cover extends even in death. It is to say that the insurer will take care of your responsibilities like your child’s education. However, it is important to note that PAI is simply a complementary policy that one takes. The Ministry of Health (MOH) requires all Singaporeans to take on MediShield, a basic medical cover.
Therefore, opting for PAI will simply be bolstering your cover. It is because the basic medical cover does not provide comprehensive accident cover. For instance, such health coverage takes care of the medical expenses as a result of an accident. However, it does not cover the actual effects of the accident, like disability or death.
Classification of risk
From the get-go, one wonders how much PAI coverage one should have. Interestingly, this question does not have a straightforward answer. It is because the amount of PAI coverage you take depends on how the insurer classifies your risk exposure.
For instance, a government office worker who spends 40 hours a week seated will not need a lot of coverage. On the other hand, a machine operator in one of the industries in the Singapore Industrial Estate carries higher risk.
Therefore, such an individual will require much more cover. Fortunately, most employers in the industrial and construction sectors take the policies for their employees.
A good example is Aviva Plc which classifies policyholders in classes. Each class carries its risk premium. In the first class (Class 1), policyholders include desk-bound employees who mainly work indoors. Notably, these are individuals who perform non-manual duties, and are less exposed to accidents.
If you belong to this class, you do not require much coverage. It is because the possibility of being in an accident leans towards zero. As such, the risk premium is quite low.
The second classification (Class 2) includes people who perform light manual work. This includes people who work in the vicinity of machines but are not in danger of accidental hazard.
However, their risk premium is higher than the members of Class 1. As such, people in this class will require more coverage.
Interestingly, Aviva does not provide coverage to individuals involved in heavy manual work. It is to say that anyone in this group could get hurt at any time. As such, their risk premium is too high to warrant an appropriate cover. Similarly, other insurers have their systems which they use to determine the amount of coverage one needs.
Therefore, the first step towards learning how much PAI cover you should take begins at defining your class. Here, visiting an insurer of choice will help since each company maintains unique appraisal mechanisms. Ultimately, the insurer will provide crucial information that will help you determine the amount of PAI coverage you need.