Personal Accident Cover v Income Protection
Personal accident cover and income protection serve different purposes, so it’s important to understand their distinctions when considering which one may be suitable for your needs.
Here’s a brief comparison of the two:
Coverage Scope
Personal accident cover pays out if you have an accident which prevents you from working. Not all types of accidents are included so it’s a good idea to check with the insurer (or us!) which ones are covered. It focuses on providing financial support in specific accident-related situations.
On the other hand, income protection is designed to replace a portion of your regular income if you become unable to work due to any illness, injury, or disability, regardless of whether it resulted from an accident or not. Income protection offers broader coverage for various medical conditions that may stop your from doing your job.
Occupation Specificity
Personal accident cover is the same price regardless of your occupation so assuming your occupation is covered, you will pay the same price as everyone else.
This can make it seem much more affordable than income protection.
Income protection is priced based on your occupation class. So if you work in a manual occupation (like a plumber), you wuill pay more than someone who works at a desk (like me!)
How Much Income Can You Insure?
You can insure up to €400 per week on a Personal Accident Plan so that’s a total of €20,800 per annum
You can insure up to 75% of your annual income on a Income Protection Plan up to a maximum of €262,500 per year.
Cost Considerations:
The premiums for personal accident cover are generally lower compared to income protection because of the limited scope of coverage.
A 45 year old could buy €400 per week Personal Accident Cover for just €40 per month!
Income protection premiums tend to be higher as they offer broader coverage and can provide ongoing payments for an extended period.
You can get an income rpotection quote here
How Long Before Each Pay Out?
Personal Accident Benefit will payotu as soon as the insurer has proof that you cannot do your job due to an accident.
With Income Protection, you choose the Deferred/Waiting Period. The insurer will payout if you cannot do your job for longer than the Deferred Period.
How It Pays Out and for How Long?
Personal accident cover pays out monthly for up to 52 weeks.
Income protection, however, provides ongoing monthly payments to replace a portion of your lost income if you’re unable to work due to a covered illness or injury.
The payments continue until you recover, reach a specific age, or the policy term expires.
Suitability:
Personal accident cover may be suitable if you primarily want protection for accidents and are not concerned about long term inability to work due to ill health.
It can provide financial support for immediate expenses such as medical bills or paying the mortgage.
Income protection is more suitable if you want to safeguard your income and maintain your standard of living in case you’re unable to work due to illness, injury, or disability, regardless of whether it results from an accident or not.
Over to you
Ultimately, the choice between personal accident cover and income protection depends on your specific needs, priorities, and budget.
I’d recommend starting with income protection.
If it’s not available or the premiums are outrageous then personal accident cover plus serious illness cover is the next best thing.
But if you can, go for income protection, it offers far superior protection.
Thanks for reading
Nick
