Keep up with ongoing expenses in the event of an accidental injury.
Personal accident insurance is a form of cover that protects you financially in the event of an injury as a result of an accident. If an incident occurs, accident insurance will cover you either in the form of a lump sum or through income replacement.
Why do Australians take out personal accident insurance?
Personal accident insurance can provide you cover in the event of injuries sustained from accidents. Some of the key benefits of taking out cover include:
- Replacing lost income and focusing on recovery. The benefit you receive can be used to cover the costs of living, rehab and what's not covered by your health insurance.
- A more affordable policy than full income protection. Accident-only income protection insurance covers only injuries and not sickness, but this means premiums may cost less.
- A benefit that can pay out in a few ways. You can either get ongoing income replacement or a lump sum payment.
Compare accident and illness income insurance
The definition and payout for a "personal accident" depends on the type of insurance. Here's how it works:
You're covered if you get into an accident that leaves you:
- Unable to work
- With a defined injury (on some policies)
How am I paid out?
You may receive a lump sum payment or monthly income protection depending on whether your policy is:
- Standalone personal accident cover
- Total and permanent disability (TPD) cover
- Accident-only income protection
- Income protection
How does each type of personal accident cover compare?
|Type of cover||What's covered?||Medical screening||Payout type||Can I get a quote on finder?|
|1. Standalone personal accident||Specific injuries due to accidents e.g. fractures, burns and dislocations||Most policies won't require one.||Lump sum||n/a|
|2. TPD cover||Injuries and illnesses that leave you permanently disabled||Most policies will require one.||Lump sum||Yes|
|3. Accident-only income protection||Injuries that put you out of work temporarily||Most policies won't require one.||Monthly income replacement||Yes|
|4. Income protection||Injuries and illnesses that put you out of work temporarily||Most policies will require one.||Monthly income replacement||Yes|
Workplace accidental injury and disease claims in Australia
|Strains and sprains||42.40%|
|Contusion with intact skin surface||5.60%|
Source: Key Work Health and Safety Statistics, Australia 2014 Learn more about workplace injuries and statistics in Australia
A sample policy could cover these types of injuries.
What does this include?
|Death & Total Disablement||Quadriplegia|
|Accidental loss of life|
|Disablement||Permanent total or partial loss of eye sight|
|Permanent total or partial loss of hearing|
|Permanent total loss of use of one or two limbs|
|Permanent total loss of speech|
|Leg and arms|
|Fracture injuries||Thumbs, Fingers, Toes|
|Collarbone or Sternum|
|Kneecap and elbow|
|Wrist, Ankle, Hand, Foot|
|Cervical e.g. neck|
The table above is for illustrative purposes only and is not indicative of all policies available on the market.
Here are some of the perks you can get from taking out a personal accident policy:
- Tax deductible premiums. The premiums you pay on income protection accident cover can be claimed as a deduction leading to a bigger return at tax time.
- Flexible benefit payments. Depending on the type of cover you choose, you can choose to receive a successful claim as a lump sum payout to help with upfront medical expenses, or get your benefit monthly to assist to help with living expenses.
- Total and permanent disability benefit. Most policies will include a benefit payout for total and permanent disability, where you are not able to return to work at all because of an accident. For example, if you were to lose a vital sense like sight or the use of a hand or foot, you would be eligible for this benefit. This extends to accidents resulting in paraplegia or quadriplegia.
- Hospital reimbursement. Your policy can include cash benefits for each night spent in hospital.
- Extra payouts. Some policies offer double or triple benefits if your accident is sustained while you’re travelling, or for disappearance or exposure.
- Associated accident costs. Accidents can entail a bunch of extra costs, so personal accident policies may provide a payout to assist with fees for counselling, rehabilitation, damage to clothing or personal property, and even the cost of specialist transport required to get you to hospital.
What additional features can my personal accident cover include?
Depending on the insurer, you may have access to additional features, such as:
- Automatic renewal. Once your policy is approved, your insurer guarantees the renewal of your policy at the end of each contract period, or up to some stated maximum – often two years. This can save you needing to constantly renew it yourself.
- Business expenses cover. This feature can mean your insurer will pay your weekly business expenses as they occur, or a set amount of business expenses stipulated in your policy agreement.
- Work and leisure cover. Some policies will only cover you for accidents which occur at work. This lets you stay covered no matter where you are.
- Transport insurance. This option extends cover to vehicle accidents, including injuries sustained behind the wheel, in the passenger seat, on public transport or even when you’re struck by a vehicle while walking.
- Volunteer work. With this, you can get insured for accidents which occur during your volunteer hours.
Personal accident insurance does not generally cover:
- Injuries which have been self inflicted as the result of a suicide attempt
- Dental injuries
- Illnesses (on standalone personal accident insurance cover)
Whether you’re accident-prone or not, be ready for what comes your way. The wheels of fate may move slowly and disaster strike at any time, but with personal accident insurance you’ll be insulated against the worst of it.
How do I make sure I'm covered when I make a claim?
To make sure you don’t get a surprise denial when you need it most, we’ve detailed the most common reasons for rejection and what you can do to avoid them:
- A specific injury or illness isn’t covered. Most policies have a defined list of inclusions and exceptions. Know what is and isn’t covered when signing up.
- Non-disclosure. You need to be upfront about pre-existing medical conditions and injuries as well as what your occupations are when applying, or an insurer may reject your claim down the line.
- Workplace compensation. If you’re entitled to separate workers compensation from an incident, some policies won’t pay out. Make sure you understand whether your workplace provides separate cover beforehand.
Personal accident insurance can benefit a wider range of Australians than you might expect. Some examples include:
Benefits are not restricted to paid work, and volunteer workers can get access to personal accident insurance in case they are unable to perform their duties. In this instance, the organisation they volunteer for is covered if they lose one of their volunteers for a period of time.
In addition, family day carers and other self-employed workers who don’t usually have access to sick leave or other workplace injury compensation can receive benefits they would otherwise lack, such as:
- Compensation of up to 75% of average gross weekly income.
- Benefits paid for up to 52 weeks (following a 30-day excess period).
- Accidents which occur at any time of the day or night, anywhere in the world.
- Cover without a medical check (although pre-existing conditions are often excluded).
- Flexible premium payments, where you can make payments monthly or yearly.
- A HIV accidental infection benefit.
- Cover for complications from pregnancy or birth for up to 10 weeks.
- Bereavement leave for two weeks if there is a death in your immediate family.
Working a trade? Personal accident insurance for those in trade industries can provide financial protection should you fall ill, be injured or even pass away (for some policies). Depending on how risky your trade is, you may find it difficult to apply for income protection cover, so secure your income with accident insurance, instead.
Athletes, professional and extreme sports players
Losing a star player during championship season can spell the end. As a result, many professional athletes are insured against injury by their team or sports club. If you’re not quite at that level just yet but you still rely on your body to earn your keep, consider personal accident insurance for sports players. There’s a range of policies no matter your chosen field – a professional dancer, for example, might get cover for broken bones and soft tissue injury for up to 52 weeks.
This depends on the type of personal accident insurance that you have:
|Type of cover||Age of entry||Age limit|
|1. Standalone personal accident||18||70|
|2. TPD cover||16||64|
|3. Income protection||18||64|
Note: Exact age limits will vary between each insurer.
- Personal accident insurance. Will usually only pay a lump sum of cash after an accident where you have suffered an injury.
- Income protection insurance. Will pay an on-going benefit while you are off from work after an accident. Income protection insurance generally also includes benefits for sickness. Therefore, personal accident insurance is generally classified as a policy which pays a cash sum, and income protection insurance generally pays monthly benefits.
While some personal accident insurance policies may provide cover in the event of death, it's important to consider that there are some notable differences from life insurance. These include:
|Personal Accident Insurance||Life Insurance|
|Type of cover||Provides a lump sum, monthly or weekly benefit in the event that you are ill or injured in an accident and unable to work.||Provides a lump sum payment in the event of your death or if you have been diagnosed with a terminal illness with less than 12 months to live.|
|Cover amount||Limited benefit amount and depends on your average income at the time of application.||Unlimited cover|
|Continuation of cover||May be cancelled||Renewable until you turn 99 years old, provided that premiums are paid when due.|
Which is right for me?
There is no one "right" policy, however as a general rule of thumb:
- Life insurance is for adequate protection to cover your family financially in the event of your death
- Accident insurance is to cover you in the event of an injury
What determines how much I pay for cover?
There are several factors that can affect the cost of your personal accident insurance premiums, including:
- The waiting period. The shorter the waiting period you select, the more you will typically have to pay for cover.
- The benefit period. Longer benefit periods attract higher personal accident insurance premiums.
- Your occupation. People who work in high-risk occupations generally have to pay more for cover. For example, someone who works on a construction site would typically pay more for cover than an accountant.
- Whether you choose an agreed value or indemnity value policy. The benefit you receive under an agreed value policy is agreed upon when you apply for cover, while the benefit amount under an indemnity value policy is worked out based on your income at the time you make a claim.
- Your benefit amount. The higher the benefit amount you are eligible to receive, the more you will have to pay for cover.
- Your age. The older you are, the greater your risk of accidental injury and therefore the higher your premiums.
You may consider taking out personal accident insurance if:
- You don’t have the savings or the means to pay your living expenses without your income
- You want to be protected until you retire
- You are self employed or employed on a casual or contract basis
- You want to protect your finances