Personal Accident (PA) is a type of coverage that pays out in the event of death, disability and dismemberment of parts of the body. You’ve probably heard of this product frequently through bank telemarketing.
PA similar to Life which also pays out in death and disability claims, but there are some differences:
Some may not see the need for high sum PA in the event of death, but it can be considered for the accidental disability benefit. Costs associated with being disabled or limited mobility can be helped by the pay-out from PA, and the person can recoup some of the potential loss of income at a lower cost basis than Life.
If a person has both Life and PA, and the death/disability is caused by an accident, then both will pay-out. While the coverage to cost ratio of PA compared to Life is higher, this does not mean that one has to be preferred over the other, given the comparison table above.
How much PA is enough PA? The more the merrier. Just kidding. The likelihood of death/disability due to an accident is higher when younger age vs developing an illness. And, given that the price is cheaper, I have 2x the amount of PA as I do with Life. I hope I don’t sound like I’m fear-mongering here, as I’m just sharing my thoughts on how I approach this as a relatively young person without any dependents yet, and you may approach differently.
Cheers. - wan