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By definition, an accident is an occurrence that isn’t planned. It often comes when least expected and causes a wide range of issues, sometimes resulting in financial ruin. This is true regardless of your current financial situation. Thankfully, there are some ways to at least somewhat counteract the negative impact of an accident, mainly by getting certain types of accident insurance.
Be aware this goes above and beyond simple health, car or life insurance, though those are also vital to sustaining your financial standing or leaving your family in a good situation should an accident cause the loss of your life. Read on to learn more about accident insurance and why you need to know more about it:
Three Types of Accident Insurance You Need to Consider
Before breaking down the benefits, overview and other factors of accident insurance, let’s look at the three most common types you might want to consider. They are listed below:
Death & Dismemberment
Admittedly, this type of accident insurance seems morose, but it is a reality for many, so it must be considered. Death & Dismemberment accident policies are actually a pretty common type of insurance sold. They are often inexpensive and provide benefits to your loved ones who remain behind.
The payouts are applicable in the event you either become dismembered or are killed as a result of one of the types of accident for which you are insured. Please note: Often death by suicide, illness, old age, etc. are not covered events.
Generalized Accident Insurance
This type of accident insurance provides payouts in either payment or lump sum forms if you have an accident listed in your policy. You can add riders to a generalized accident policy, which will cover additional medical services like hospital stays or ambulance services, pertaining to the accident.
A generalized accident insurance plan is just what it sounds like, it can cover a wide range of accident, covering something as minor as a sprained ankle to something as serious as permanent paralysis. It’s worth remembering, though, that in some cases, there are stipulations due to the cause of the accident that will result in no payout. Talk to your financial professional/ agent about this possibility.
This type of accident insurance is often purchased by employers for their employees. However, in some case, like if you are self-employed, you might want to consider purchasing a policy on your own. This type of accident insurance kicks in when you are injured on the job. In many cases, if an accident is bad enough to cause you to miss work, it is a covered occurrence.
Some policies replace a specific percentage of your income as part of the insurance policy. If you are facing long-term or permanent disability, you will need another type of insurance as well, as this type of insurance is designed to supplement your income, and get you back on your feet and back to work. It isn’t designed to replace your income from now on.
How Likely Are Life Altering Accidents? Disproving The “It Will Never Happen to Me” Syndrome
It’s vital for you to understand EVERYONE needs this type of insurance. Sure, there are some who benefit more than others from accident insurance (more on that below), but it’s a good idea for everyone. Unfortunately, many have what’s called the “that won’t happen to me” syndrome. They know “accidents happen,” but they don’t ever actually consider the fact that said accidents might happen to them, personally. Consider the following stats, which prove everyone is at a risk for accidents, no matter their health or other factors:
- According to a National Safety Council study, accidents are one of the top causes of death, worldwide, falling only behind cancer and heart disease.
- The most common fatal accident is a car wreck. Your odds of dying of this is one in 114 based on the same study mentioned above.
- Injuries are the single most common cause of death for Americans who are 45 years of age and younger. This according to the Centers for Disease Control.
- Pedestrian accidents, firearms, falls, drowning and fires make several causes of accidental deaths in the United States.
Although the above incidents resulted in death, not just injury, the stats are used to show how very common accidents are, even though you likely feel, “it will never happen to me.”
What is Accident Insurance?
Accident insurance is a type of financial insurance, supplemental in nature, that pays out in a lump sum form if you find yourself injured in specific types of accidents. Although it works similarly, accident insurance is distinctly different from health insurance. It is ideally used to complement your disability and health insurance. It can offset extremely high medical costs if your health insurance doesn’t cover all your medical costs after you fall victim to an accident.
Why You Need Accident Insurance?
You might ask yourself why you would need a supplemental form of insurance above and beyond, life, health and auto insurance. The answer is easy, financial protection. Accidents are costly, not just in an emotional and physical way, they are also extremely devastating to your bottom line. Out-of-pockets costs incurred from an accident can skyrocket, leaving you in a mess, even with the help of various types of traditional insurance. Even a small fall can add up to several thousands of dollars out-of-pocket, even with medical insurance.
How Accident Insurance is Funded?
Accident insurance is similar to other types of insurance in that you pay premiums on a periodic or monthly basis. This premium gives you a predetermined amount of coverage. If you are injured in a specific way, outlined in your policy, your accident insurance will then pay out.
Who Benefits the Most From Accident Insurance?
As stated above, accident insurance is a good idea for virtually anyone. However, there are some situations where it can be more beneficial than in others, they are listed below:
You Have Health Insurance With Sky-High Deductibles
In general, if you have a high deductible medical insurance plan, you can face some serious bills after one small accident. For example, it’s not uncommon at all to have to pay upwards of $10,000 out-of-pocket “before” your health insurance will kick in and pay. A small accident that results in a quick emergency visit and then subsequent loss of income due to not being able to work will likely be funded primarily by you alone if you have a high deductible health plan. This is the benefit of supplemental health insurance. It serves in the gap between what your health insurance will pay and what you are facing in reality. It is also most advantageous for those without significant savings, making such a financial hit devastating.
You Can’t Get Enough Life Insurance
In some cases health issues make it impossible to qualify or afford enough life insurance. In these situations, specific types of accident insurance, like death and dismemberment can be a good idea.
You Have Little or No Disability Protection
If you work part-time, your employer doesn’t offer disability insurance or you are self-employed, accident insurance can be a way to protect yourself from the loss of income in the event of an accident.
Your Job is on The Road
Since car accidents are so prevalent, if your job requires you to be on the road frequently, such as service technicians, salesperson, delivery driver or truck drivers, supplemental accident insurance can be a way to boost your coverage and protection.
Accidents are not something anyone wants to think about. However, by planning for the possibility and preparing a “just in case” contingency in the form of accident insurance, you are protecting your and your family’s financial security if the worst should occur.