What does Personal accident and sick (PAS) insurance cover?
Personal accident and sickness (PAS) insurance pays fixed benefits if the insured suffers an accident is off work due to sickness.
What determines the level of cover with regards to Personal accident and sickness cover?
Since a true indemnity can’t be provided, the level of cover is primarily determined by how much premium the insured can afford to pay.
What is indemnity?
Indemnity is the fundamental principle of insurance whereby the insurer seeks to place the insured in the same financial position after a loss as was occupied immediately before the loss.
This can be achieved by a cash payment, replacement, repair or reinstatement
How do insurers set a Personal Accident and Sickness insurance benefit?
The insurer sets the insureds weekly benefit at a level below the insured’s normal earnings to encourage the insured to return to work.
What is the definition of an accident within a PAS policy
Insurer’s wordings have key elements that help to define what is accidental:
- the event must arise from a single identifiable cause (an accident);
- the accident must have been fortuitous (unintentional);
- a time limit is set between the accident and the event insured (e.g. death or a form of disablement);
- sometimes policies specify that no other cause must contribute to the death or disablement resulting from the original bodily injury
What does the accident section of a PAS policy cover in the event of accidental death or bodily injury?
- Lump sum benefits are paid in the event of death or certain specified injuries (described later);
- In the event of permanent total disablement, either a lump sum or a ten-year annuity is paid; and
- Weekly compensation (up to a maximum of 104 weeks) is paid if the insured suffers temporary total disablement, with reduced weekly benefits for temporary partial disablement.
What does sickness cover for a PAS policy look like?
- The sickness sections of a PAS policy provides a weekly benefit for up to 104 weeks.
- This benefit is usually subject to a time franchise, meaning that for the first seven days, no payment is made.
However, should the sickness extend beyond 7 days, the entire period is covered. - There is generally an exclusion for claims made within 21 days of policy commencement
What length of time after an accident can the insured die to still be eligible to claim?
12 months
What are the typical exclusions of a personal accident and sickness policy?
- The insured being under the influence of drugs or alcohol
- Self-inflicted injury or disease
- Pre-existing physical disabilities
- Childbirth, pregnancy, venereal disease or AIDS
- certain extreme sports
- sickness within 21 days of policy commencement
- war risks
