In this article, I explain the coverage under a personal accident policy and why it is better than buying an accident rider to a life policy.
If you find it difficult to buy a term insruance policy, you can start with a personal accident policy (for $300,000 or $500,000) and switch to a term insurance policy at a convenient time in the future.
Can you explain the differences between PA and Life Insurance? Why one should buy either or both?
ReplyDeleteThanks!
A personal accident covers death and injury by accident. Term insurance covers death by accident and sickness.
ReplyDeleteFor young people, most death occur by accidents. It is easier to apply for a personal accident insurance, rather than term insurance, as the underwriting is simpler.
If you can get term insurance, it is better. But, if it is too troublesome, get personal accident first.
In a nutshell, most PA covers death and permanent disabled (some even covers others) due to accident only while Life covers both death and sickness (must not be pre-existing conditions) which may arise from accident or self-inflicted (like suicide but with conditions). Another difference is that PA doesn't have a cash value while Life can have cash value.
ReplyDeleteAs to why one should buy either or both, it depends on one's objective. If you want protection from death but have little cash now, then PA is a good choice. If you want both protection and some cash value plus you have extra money, you can consider Life. But do note that Life nowadays doesn't give very good return. Read Mr Tan's book and you will know 8-)
Dear Mr Tan,
ReplyDeleteThe attached article has been around for 3 years. I've tried to find similar PA plans to no avail (Aviva, Insupermart, DirectAsia, Income, etc). The premiums have gone up it seems. Do you think it's time to have a updated article on this topic?
Thanks.