The Difference between Life Insurance and Personal Accident Insurance

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Personal accident insurance

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Life is short. In the wake of death, the ones who live on must learn how to cope emotionally and financially. That’s where life insurance and personal accident insurance come into place. Both types of insurance offer protection to those who are financially dependent on the insured in the unfortunate event of death. But what’s the difference between both? Should you choose life insurance or personal accident insurance or both? Read on to find out.

At a glance: Life Insurance vs Personal Accident Insurance

Life InsurancePersonal Accident Insurance
Main coverageDeath by natural causesInjuries or death caused by accidents only
Affordability$$$ to $$$$$$$
Tax benefitsTax deductible!Not tax deductible
CommitmentA fixed period (usually 5 or 20 years) or a lifetime policy termMonthly or yearly renewable policy term
FlexibilityStandalone planStandalone plan or optional rider
ConvenienceMedical underwriting is not always required


Difference in coverage

While both life insurance and personal accident insurance cover the death benefit to provide strong financial support in case of death of the policyholder, it is important to note the difference in terms of coverage.

Life insurance covers death due to natural reasons, while personal accident insurance (as implied by its namesake) covers death or injuries due to accidents. Most life insurance do not cover injuries or treatments. An accident plan covers that if your injuries or treatments are due to an accident, and could be handy to have.

Did you know? ePROTECT safety at Tiq by Etiqa Insurance covers unexpected expenses due to accidents and infectious diseases. For a limited time, it comes with free COVID-19 and Dengue Fever cover too! Learn more

Affordability: Which is cheaper?

The affordability of life insurance varies greatly, depending on the profile of the policyholder, and also whether it is a term or whole life plan. To put things into perspective, let’s look at some plans at Tiq by Etiqa Insurance:

term life insurance costs as low as S$0.04/day (~S$14.60/year) while a whole life plan could cost hundreds or thousands of dollars per year. A personal accident insurance such as ePROTECT safety is available from S$18/month (~S$216/year).

Note: Both insurance provide different coverage, hence it would not be an apple-to-apple comparison. The above prices are just for reference.

Tax benefits

Dread the tax season? Good news for those of you who have yet to file your income tax return: filing deadline has been extended to 31 May 2020. For those who are not in the know, here’s another piece of wonderful news: your life insurance is tax deductible (up to a certain limit). On the other hand, personal accident insurance is not tax deductible.

Personal accident insurance - commitmentImage credit: Unsplash

Commitment

Life insurance tend to have a longer policy term, typically ranging from 5 years, 20 years to a lifetime. This means that you’d be paying for your coverage during this period. The available policy terms for Personal Accident Insurance are more flexible with annual and even monthly renewable options.

#TiqOurWord Did you know that ePROTECT safety offers a flexible monthly coverage from just S$18 per month? You get to decide if you want to continue your protection for each following month. Auto renewal option is available too!

Flexibility

Life insurance usually comes in the form of a standalone plan, providing a clear option for those who’d want to cancel or reduce their coverage. However, it is important to note that life insurance is time-sensitive (or rather age-sensitive).

Your age is one of the factors that is used to access your risk level, which will ultimately affect how much you need to pay for your coverage. That’s also one of the reasons why most people would not randomly cancel their life insurance cover.

For personal accident cover, a standalone policy makes it easier to adjust your portfolio versus a rider that will only be inforce if your main policy is maintained. If you surrender your main policy, you will need to give up your rider benefits too.

Convenience

Some life insurance and personal accident insurance require medical underwriting, but this is not always the case. At Tiq by Etiqa Insurance, our online life protection plans and personal accident insurance are fast and easy to purchase in just a few clicks. No medical underwriting required, unless otherwise stated.

Should you get a life insurance or personal accident insurance?

Personal accident insurance at Tiq by EtiqaYou often see it on the news… about people’s lives being cut short. Be it due to a global pandemic such as the ongoing novel coronavirus that has resulted in countless deaths, or touching obituaries that commemorate a loved one who passed on at night during sleep, life is unexpected, and sometimes too short.

We hope the above information is helpful. For further insights on life insurance and personal accident insurance, read this and this. We can’t help you to decide which insurance to get but any insurance is better than none.

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Information is accurate as at 4 May 2020. This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). Protected up to specified limits by SDIC.

As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid.

It is usually detrimental to replace an existing personal accident plan with a new one. A penalty may be imposed for early termination and the new plan may cost more or have less benefit at the same cost. Benefits of the policy will only be payable upon an accident occurring.

You should seek advice from a qualified adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you.

Tiq by Etiqa Insurance Pte. Ltd.
A digital insurance channel that embraces changes to provide simple and convenient protection, Tiq’s mission is to make insurance transparent and accessible, inspiring you today to be prepared for life’s surprises and inevitabilities, while empowering you to “Live Unlimited” and take control of your tomorrow.

With a shared vision to change the paradigm of insurance and reshape customer experience, Etiqa created the strong foundation for Tiq. Because life never stops changing, Etiqa never stops progressing. A licensed life and general insurance company registered in the Republic of Singapore and regulated by the Monetary Authority of Singapore, Etiqa is governed by the Insurance Act and has been providing insurance solutions since 1961. It is 69% owned by Maybank, Southeast Asia’s fourth largest banking group, with more than 22 million customers in 20 countries; and 31% owned by Ageas, an international insurance group with 33 million customers across 16 countries.

Discover the full range of Tiq online insurance plans here.

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