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Accidents can happen at any time, and they can be costly. Medical expenses, lost wages, and other costs associated with an accident can add up quickly. If you’re not prepared, an accident can put a significant financial strain on you and your family.
That’s where accident insurance comes in. It’s a type of long-term disability insurance that replaces your income if you get an accidental injury. The monthly benefit can provide a financial safety net while you recover from the accident.
In this post, we’ll take a closer look at accident insurance, including what it is, how it works, and why you might need it.
What Is Accident Insurance?
Accident insurance is a type of disability insurance that provides monthly benefits if you can’t work as a result of an accident. Because accidents can be costly, the benefit helps replace your income and pay for medical expenses so you can focus on recovery without worrying about the financial consequences.
How does accident insurance work?
Accident insurance pays you a tax-free monthly benefit if you’re unable to perform the tasks of your occupation due to an injury.
When you make a claim, you have to satisfy a waiting period before you receive benefits. While the shortest waiting period is 0 days, this is quite expensive, so it’s recommended to self-insure for the first few months and choose a longer waiting period like 90 days.
You can also pick a benefit period, which is the number of years the insurance company will pay you. Standard benefit periods are five years, to age 65 or 70. To protect yourself from a permanent disability, choose the longest benefit period available.
Why get personal accident insurance?
There are several reasons why someone might choose to get accident insurance.
Replace lost income: If an accident results in an injury that prevents you from working, accident insurance can provide financial support to help cover lost wages.
No existing coverage: If your employer does not provide group insurance or you are self-employed, accident insurance can help fill in any gaps in coverage.
Peace of mind: Accidents happen—even to the most careful people. Knowing you have additional financial protection in case of an accident can provide peace of mind and help you worry less about the financial consequences of an accidental injury.
Risky lifestyle: You may also work an occupation or lead a lifestyle that is riskier than usual. In that case, your chances of becoming disabled from an accident are higher than average.
Do you also need sickness coverage?
Did you know that most claims for disability benefits are due to illnesses?
That means the best type of disability insurance covers both accidents and sicknesses. However, you may be declined disability insurance if you have a pre-existing medical condition. Therefore, you’d need an accident insurance policy if you want any income protection coverage.
Many accident insurance policies let you buy illness coverage as an add-on with a few conditions:
The benefit amount and period for illness must not exceed the ones for injury coverage
The waiting period must be as long or longer than for accident insurance coverage
Besides answering health questions, you may also need to undergo a medical exam if you opt for illness coverage.
What exclusions does accident insurance have?
A personal accident insurance policy’s exclusions vary depending on the insurance company. Besides standard exclusions like disabilities resulting from participation in a war, while incarcerated, and from normal pregnancy, injury insurance also excludes the following:
Travelling or flying in an aircraft
Engaging in professional athletics or professional underwater activities, mountaineering, rock climbing, caving, parachuting, sky diving, hang gliding, bungee jumping, or racing
Operating a vehicle while intoxicated
Committing or attempting to commit a criminal offence
The disability insurance policy may also limit the payout for back and neck injuries, degenerative disc disease, and soft tissue injuries.
Do you need accident insurance if you're covered by Workers' Compensation?
Workers’ Compensation provides financial protection in the event of a job-related accident or illness. However, it’s important to note that it does not cover non-work-related accidents.
As a result, an accident insurance policy can protect you in case of an accidental injury away from work. Most plans let you choose between 24-hour or non-occupational coverage. If you are covered by Workers’ Compensation, you can choose the latter option to save on premiums.
How much does accident insurance cost?
Unlike disability insurance which also covers sickness, the cost of accident insurance doesn’t depend on your age, gender, or smoking status. In fact, a 25-year-old buying coverage will pay the same premiums as a 65-year-old.
The only things that affect the premiums are the occupation and benefit amount. For example, someone in the lowest-risk occupation class will pay $40/month for $5,000 of monthly benefits, compared to $91/month for an insured person in the highest-risk occupation class.
How can you buy accident insurance?
One of the benefits of accident disability insurance is the ease with which you can buy it. You don’t need to undergo any medical exam or answer health questions. In fact, you only need to answer three eligibility questions. They are:
Do you have any ongoing restrictions or limitations to your bodily movements or daily activities as a result of an accident or other condition?
Are you currently working at least 20 hours per week, 35 weeks per year?
Are you a Canadian citizen, or have you been granted Permanent Resident (landed immigrant) status by the Canadian government?
If you answer ‘Yes’ to question 1 or ‘No’ to questions 2 or 3, you are not eligible for accident insurance benefits. The effective date will be shortly after you apply, as there is no medical exam or health questionnaire.
Frequently Asked Questions
What is the meaning of accident insurance?
Accident insurance provides income replacement coverage if you suffer an accidental injury and are unable to work. It’s an optional insurance policy that you can buy through an insurance agent.
What are the two most common types of disability insurance?
The two common types of disabilities covered by insurance are injuries and illnesses. Despite the fact that most people associate disabilities with injuries, illnesses are the leading cause.
Short and long-term disability insurance are the other types of disability insurance. Short-term disability insurance covers an insured person for up to six months, while long-term disability insurance offers coverage options for up to age 65.
Is accident insurance the same as accidental death insurance?
No. Accident insurance pays a benefit if you become disabled from work, while accidental death insurance gives your family a lump sum payment if you die from an accident.
Which insurance is best for accidents?
Besides accident insurance benefits, you can also get accidental death and dismemberment coverage. These provide lump sum payments—either to your family if you pass away or to you if you suffer a severe injury.
You can also pay for coverage options like accidental fracture and extended medical care. Accidental fracture pays up to $10,000 for broken bones, while extended medical care provides up to $100,000 for medical care following an accident. Some covered expenses include hospital expenses, ambulance, private home nursing, chiropractor, physiotherapist, medications, and dental repair.
Since provincial health insurance may already cover some of these expenses, the additional costs for these riders are usually only a few dollars per month.
What does personal accident insurance cover?
Accident insurance covers lost income if you’re unable to do your job due to an injury. While the definition of an injury is broad, there are some exclusions and limitations. Be sure to check the insurance policy carefully, so you understand your coverage.
Is it worth getting personal accident insurance coverage?
Income protection should be a priority if you are self-employed or an employee without any group insurance benefits. A long-term disability without financial assistance could devastate your budget and retirement plan. Therefore, it’s vital to protect yourself and your family if you get injured.
Even if you can’t qualify for illness coverage due to a medical condition, getting injury covered through a personal accident insurance policy is worthwhile. Although illnesses cause most disabilities, you’ll still have peace of mind knowing accidents are covered.
Need An Accident Insurance Quote?
Accidents and injuries may be unpredictable, but that doesn’t mean they have to derail your financial plan. An accident insurance policy can ensure you meet your financial obligations in case of unexpected accidents. Remember, peace of mind is priceless, and accident insurance can provide just that.
We work with all the major insurance companies that sell accident insurance. Contact us at info@briansoinsurance.com or 604-928-1628 for a free no obligation quote.
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While we make every effort to keep our site updated, please be aware that timely information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Brian So Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser. This post is a brief summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details which can be provided upon request. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders.
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