Personal Accident Cover: What It Adds

It is widely sold as an add-on — with travel policies, motor policies, bank accounts and credit cards — which is why many households hold it several times without realising.

How the benefit schedule works

The policy lists injuries and the proportion of the sum insured payable for each: full amount for death or loss of two limbs, a percentage for loss of one, smaller percentages for defined injuries such as loss of a finger or an eye.

The definitions are precise and frequently narrower than expected. Loss frequently means permanent physical severance or total and irrecoverable loss of use, not impairment.

Injuries not on the schedule attract nothing, however serious and however disabling.

The accident-only limitation

This is the central restriction. Cover applies to accidental bodily injury, defined as caused by sudden, violent, external and visible means.

Illness is excluded entirely. A heart attack, a stroke, cancer or a degenerative condition — the causes of most long-term incapacity — fall outside it.

Since illness rather than accident accounts for the majority of working-age disability, the cover addresses a minority of the risk.

Where it genuinely fits

Occupations with meaningful physical risk, where accidental injury is a realistic prospect and the lump sum would cover adaptation costs or a period without income.

As a low-cost supplement where income protection is already in place, rather than as a substitute for it.

Sometimes as an employer-provided benefit, where the cost to the employee is nil and it is simply worth knowing it exists.

What usually serves better

Income protection pays a regular income for incapacity from any cause including illness, which addresses the actual risk to household finances.

Life insurance provides a larger sum on death for a comparable premium, without the accident-only restriction.

Critical illness cover addresses defined serious conditions, again including illness.

For most households one of these is a better use of the same premium.

Checking for duplication

Look at travel policies, packaged bank accounts, credit card benefits, motor policies and any employer scheme. Personal accident cover appears in all of them.

Holding it several times does not multiply the payout in every case — some policies coordinate — and it certainly multiplies what you pay.