Q&A: Is Personal Accident Insurance Worthwhile?
By Danny Newman, Branch Manager – Beit Shemesh, Goldfus Insurance
With the summer on our door step, tiyul and camping season has arrived. Hiking always ensures a return home with happy memories and tired limbs covered in scratches and bruises. The more adventurous amongst us might return home sporting a cast around an arm or leg.
It is often at this point that people start to think about finding some extra financial support to see them through the recovery period. We’ve all heard the advertisements offering personal accident insurance for as little as NIS 1 per day and the initial thought process is, “yes, I could afford that”. This article will provide explanation of this type of insurance and how it might be relevant to you.
What is Personal Accident Insurance?
Personal accident insurance can financially protect yourself or your loved ones in the event that you suffer an accident or disability. The most common claim on policies of this kind generally arise from a broken bone or serious burn resulting from an accident.
The compensation paid out is designed to help you with any treatment costs as well as to cover other expenses or initial loss of income; however you have the ability to use the money for whatever purpose you want. As your disability income insurance (from either Bituach Leumi or private plans) would only take affect after 3 or 6 months, this policy offers financial support while you are not at work and not receiving any additional income at the outset. While this may appeal more to self employed individuals, this policy is available to everyone.
Personal accident insurance can cover children and adults alike. In addition, due to the fact that it is an accident focused policy, an individual is only required to answer a very short health and lifestyle declaration making underwriting relatively straight forward.
Is the premium really that affordable?
Most insurance companies offer different levels of coverage which, together with a person’s age, influence the monthly premium. The most basic package could be as little as NIS 1 per day however it will increase gradually over time according to you age bracket and level of cover purchased.
What does the policy pay out?
In the event of a claim as a result of an accident, the insured individual would receive a lump sum payout according to the terms and conditions of the policy purchased. Payouts for personal accident insurance in Israel are based on a percentage system as determined by each specific policy- either 3%, 35% or 100% payout of the sum insured. Most insurance companies in Israel offer three levels of cover; a pay out of up to NIS 150,000; a pay out of up to NIS 250,000; and a pay out of up to NIS 350,000. Compensation payouts are determined on a case by case basis and there may be scenarios where the maximum payout is not deemed necessary, as determined by severity of the injury attained in the accident and the limb involved.
Are there alternative policies?
Recently, some insurance companies have come to the realisation that a lump sum payout may not be as useful in the event of an injury as people expect. As a result, a number of companies are now offering a monthly payout up to NIS 4000-4500 per month for a period of up 18-36 months. This allows you to choose the sum insured and the period of time that you would like to receive cover for, ensuring a steady income for a specific amount of time while incapacitated. The premiums on such policies are influenced by the sum insured, the length of the policy and the profession of the individual.
Is it essential to purchase such a policy?
For certain professions, such as tour guides, contractors and taxi drivers, personal accident insurance could be a very useful policy to have, as they are self-employed and dependent on their body to do their work effectively. While some would argue that life insurance and private health are more important insurances before personal accident cover, it is very worthwhile, and an assessment of your insurance portfolio will determine whether this is a policy that could really make a difference to you. It is always best to sit with a professional to discuss your insurance needs and determine whether personal accident insurance is necessary for you.
For more information about Personal Accident Insurance, contact us today!