Summary
What would become of your family if you were to have a serious and life-threatening accident? Before you rush into insurance against this, stop and think. You could already have cover via other policies, already in place.
Accident Cover - Money Down The Drain?
How would your family cope should you be involved in an accident that left you seriously disabled - or worse! The thought of this can fill you with horror and some clever advertising typically offering a "£500,000 tax free lump sum for your family should the worst happen", could make you think of panicking into applying for insurance to cover you in the case of accidents.
It's a natural reaction, after all your family are surely the ones who would not only be distraught by such an event, but would struggle financially too. BUT here you should stop and think about it. You'll quite probably find that insurance against personal accidents is already in place within policies which you already hold. Travel and vehicle insurance would normally include it and you can even get it free if you take up some credit card offers.
Even if you're not already covered within one of the categories, why on earth would you pay for something which is often offered free?
The cover that these "accident only" policies offer is to pay out a lump sum, which is also tax free, on the event of serious injury, or death, as the result of an accident. Serious injury is classed, for example, as the loss of one or more limbs or the use of them, your eyesight (one or both) or any other permanent disability.
There are several different accident only policies available, with as many different variations on what they actually cover. Not for the squeamish, but a price is commonly given on various degrees of disability. One insurer will pay out £2,500 for the loss of a single toe, the loss of a thumb pays out £7,500 through to £100,000 for total and permanent disability. Death as the result of an accident pays out £10,000 with this particular policy.
Limitations vary too. Some insurers refuse to pay out any if your claim arises from being either the driver or passenger on a motorcycle. Mountaineering, parachuting and rock climbing can be excluded too. The only way to find out what's included (or not) is to read the small print very carefully. Which is all very well, but how can you actually take in, and remember, a whole host of facts and retain them in your mind through all eventualities.
Always assuming that you fit the criteria, the payment can be made as a one-off amount (lump sum) or as a weekly payment for a certain length of time. It's possible to extend the cover to include your spouse and offspring, although the payouts would be lower than that of the breadwinner.
This accident only cover shouldn't be confused with life insurance. With accidental cover you get what it says; cover if severely injured or killed in an accident. If you die as the result of an illness such as heart attack, they your family won't get a penny from this policy.
(This is the first of two articles about Accident Cover. The story continues in the article entitled "Review Your Protection Insurance".)
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