Definition of personal accident insurance

Written by jay p. whickson
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Personal accident insurance covers your expenses from an accident with a lump sum payment, a daily or monthly amount or a payment for loss of life from an accident. Several types of policies supplement an insurance program. Often, accidental death and dismemberment is an inexpensive form of personal accident insurance. Other forms are similar to disability income, but they pay a cash sum when you have an injury due to an accident. There are several ways to buy personal accident insurance. Some policies only pay for specific types of accident.

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History

Just like today, in early times if a man couldn't work because of an accident, his family would suffer. In 1694, Hugh the Elder Chamberlain proposed a policy to cover a family income in the event of an accident, and, late in the 1800s, it became a reality. Even though they called it accident insurance, it resembles today's disability income, providing payments to the injured person. In 1850, the Franklin Health Assurance Company of Massachusetts offered the first policy that covered injury from a train or steamboat accident. Today, some insurance companies still offer accident policies for accidents on public transportation.

Types

Accident insurance may be accidental death and dismemberment insurance that pays a specific amount if you die and a lesser amount if you lose a limb. It also might include a lump sum daily payment if you suffer injury from an accident. One form of accident insurance is travellers insurance and includes only accidents from plane crashes. Other policies pay a daily amount if you receive injury from an accident. This amount isn't an income replacement but a fixed dollar amount.

Places to Buy

You can purchase accident income through your group insurance at work. This type of insurance pays for the loss of life and limb due to an accident. Other supplementary types of coverage for accident insurance that include a group cost are part benefits from credit unions, credit cards and other financial institutions. Accident insurance also comes in the form of individual plans you can purchase through work. Groups such as high school football teams offer accident insurance. There are vending machines where a nervous flyer can buy airline accident insurance.

Cost

Accidental death and dismemberment insurance, one form of accident insurance, is often inexpensive. There's a reason for that fact. It doesn't happen as frequently as death from an illness. Traveller's accidental death insurance is also inexpensive for the same reason. Lump sum payments from an injury, not at work, that causes you to seek medical attention and miss work costs more since there's a higher likelihood of that occurring.

Misconceptions

Accident insurance doesn't pay for extended periods in the way disability does. It offers lump sum payments for the loss of a limb. Often accident insurance pays in percentage with the death receiving 100-percent payment, loss of both eyes or combination of one hand and foot or sight in one eye. There are specific percentages for other losses. For instance, you must lose a thumb and index finger on the same hand in order to get 25 per cent of the policy face value. Some policies increase payment if you had a seat belt on at the time of injury.

Over 70

Accident insurance for those in the later years is almost impossible to get. As people age, their bones become more brittle and a minor fall to a young person might cause death to someone older.

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