Because accidents happen when you least expect them. Even with health insurance, the extra expenses from an accidental injury can really add up. Lost wages from missing work, high health insurance deductibles and unpaid bills all affect your lifestyle, home and family. And because 57% of Americans have less than $1,000 in their savings accounts, many don't have financial help during times like these.
What is accident insurance
Accident Insurance, also known as supplemental accident insurance or personal accident insurance, pays benefits for accidental injuries. Consider the affect a common accident may have on your financial picture. Because you never know when you or someone in your family could get hurt. Accident insurance is a type of financial product that pays out a lump sum if you incur specific kinds of injury as a result of an accident. Similar to but legally distinct from health insurance, accident insurance complements disability insurance by allowing you to claim benefits even if the injuries you incur do not keep you out of work. Accident insurance may also complement health insurance if an accident causes you to have medical expenses that your health insurance doesn’t cover. Accident insurance works like other types of insurance products. You periodically pay a premium and in return you receive coverage. If you are injured in one of the ways listed in the accident insurance policy, you’ll receive a benefit. Like disability insurance, many of the listed injury classes are so physically disabling that you may out of commission for a long period of time – covered injuries include everything from dislocating your wrist to becoming quadriplegic. Where disability insurance pays you benefits each month you remain disabled, accident insurance only pays out a preset number of times or over a specific range of time. Additionally, accident insurance offers relatively low benefits: one company offers just $5,000 for incurring third-degree burns on one-third or more of your body. Compare that to disability insurance, which replaces as much as 60% of your monthly income. But the lower benefits mean you also have much lower premiums.
What are my accident insurance options
The options you have for accident insurance vary by state, but multiple plan options are available to meet many needs and budgets.
- Benefits paid directly to you
- Multiple benefit levels so you can choose a monthly cost that works for you
- No networks - Choose where you want to get care
- Cash to help with unexpected medical costs due to accidental injury
- Cash for accidental injury medical costs that can help pay health insurance gaps, like a high deductible
Costs of accident insurance
Accident insurance is relatively inexpensive. You can take out a policy for between $6 and $20 per month if you’re young and healthy. However, accident insurance policies frequently have deductibles, or an amount of money you have to pay out of pocket for care before you receive the benefit to take care of the rest. Like health insurance, the more you pay in premiums, the lower your deductible will be. Also like health insurance, higher premiums generally tend to get you better coverage. That means higher payout amounts for the same category of accident; some categories may not even be covered by the plan if your rates are too low. Check with the accident insurance company for information about what your premiums cover.
Eligibility for accident insurance
Every accident insurance company has different rules about who is eligible to receive benefits. To receive accident insurance coverage, you need to be at least 18 years old. Some accident insurance companies terminate your coverage once you reach a certain age, usually between age 70 and 75. If you want your policy to cover any dependents you have, accident insurance companies frequently limit how old dependents can be and still receive coverage. The age limit for dependent coverage is usually their late 20s.
What’s covered by accident insurance
Accident insurance pays a lump sum that can help you cover the costs associated with an injury incurred during an accident. Each accident insurance company is different, but you should learn what they cover before taking out an accident insurance policy. Injuries are divided up into categories to better assess risk and coverage. These include
- Eye injury
- Accidental death and dismemberment
Those categories are further extrapolated into more distinct types of injuries, and if your injury isn’t specifically identified as one the company covers then you won’t receive coverage for it. Pretty much any bone that can be fractured is covered, with the severity of the fracture and the importance of the fractured bone yielding a higher accident insurance benefit. (That is, you’ll get a higher benefit for a skull fracture than a kneecap injury, which will itself be higher than a coccyx injury.) The same payout structure applies to dislocation. Accident insurance also covers the use of medical devices and accessories, such as a prosthetic limb or crutches.
For more serious conditions, such as being in a coma, you can expect a benefit as high as $10,000. Less serious conditions, like getting a laceration, may only trigger a benefit worth a few hundred dollars at most. Companies may distinguish between “basic dismemberment,” which means the accidental loss of just one limb, the sight in one eye, or the hearing in one ear, and “catastrophic dismemberment,” which means the accidental loss of at least two limbs, the sight in both eyes, and the hearing in both ears. The loss of your ability to speak is also covered by catastrophic dismemberment. These benefits reach into the tens of thousands of dollars. The more severe the injury, the higher the payout. If you incur second-degree burns over less than 10% of your body, you could receive as little as $200. But if those burns were third-degree burns, that number jumps to $1,000. As with the severity of the injury, the magnitude of the scope of the injury matters: if more of your skin is burned, you’ll receive more money.
Some life insurance policies come with accidental death and dismemberment riders, which pay out a benefit to the deceased’s beneficiaries if the insured died or became dismembered in an accident. Accident insurance usually has a similar death and dismemberment coverage built in that could also apply to the insured’s spouse or dependents. But accidental death and dismemberment benefits from accident insurance are considerably smaller.
Your accident insurance policy may offer you optional coverage similar to the riders you find in life insurance. These include hospital stays and ambulance rides (both in a vehicle or in the air) as well as certain kinds of emergency care. Optional coverage will add to your premiums, but it may increase the number of times you can claim an injury for benefits and expand the time frame during which injuries are eligible to be claimed.
Is accident insurance worth it
Accident insurance is relatively inexpensive, but it also offers relatively small benefits. You might benefit from an accident insurance policy if your health insurance has high deductibles, because accident insurance offers a one-time payout that can help you afford medical care. You’ll also benefit from accident insurance if you aren’t eligible for disability insurance, such as if you have pre-existing medical conditions that insurers don’t cover.