The Difference Between PAI and Life Insurance

It only takes a second for a fatal accident to occur. Serious accidents that result in the loss of limb or life can happen anywhere and at any time. Accidental deaths can happen in the home, at work, or on the road.

According to CDC mortality statistics, in 2013 there were over 130 thousand accidental deaths, with the top causes including:

• Unintentional falls
• Motor vehicle traffic accidents
• Unintentional poisoning

While you can take steps to lessen your chance of dying an accidental death, you cannot eliminate the possibility. But if it should happen, having life insurance and personal accident insurance can provide income for you or your beneficiaries.

What is Personal Accident Insurance?

PAI is also commonly referred to as accidental death and dismemberment insurance. This type of insurance covers death or dismemberment (including loss of sight) due to unintentional injuries. It does not apply to deaths due to natural causes. These policies do not all have the same standard payout scale, but generally speaking, the percentage paid out is directly correlated to the severity of the injury. Unlike a life insurance policy, benefits can be paid while the insured is alive for instances such as accidental loss of a limb or paralysis. For instance, if a person loses two limbs, the full death benefit amount may be paid. The loss of one limb or an eye may result in a 50 percent payout and the loss a thumb and index finger on the same hand may only amount to a 25 percent payout.

PAI coverage can be purchased as standalone coverage or also added on to a life insurance policy as a rider to the policy. It can provide a higher amount of coverage than a life insurance policy alone. Be sure to check the terms and exclusions so you know what is and is not covered by the policy.

Why Buy Both Life Insurance and Personal Accident Insurance?

Life insurance covers both death caused by unintentional injuries, as well as death due to natural causes. Life insurance has broader coverage than accidental death insurance, so you might ask why you would need personal accident insurance. Three main reasons to consider PAI are:

• Sudden accidental deaths allow less time for dependents to prepare financially. PAI coverage can be a more affordable way to provide additional financial assistance to your dependents in the event of your sudden accidental death.
• If you have a medical condition that makes it difficult for you to buy life insurance and you still want to be covered for an accidental death or dismemberment.
• If your lifestyle leaves you more susceptible to accidents such as engaging in risky activities like skydiving, scuba diving, or other extreme sports; or working with heavy machinery, even as a hobby.

In 2013, the CDC issued a report on the top causes of death in the nation. Unintentional injury deaths were ranked as the fourth most frequent cause of death, just behind heart attacks, cancer, and chronic lower respiratory disease.

We encourage you to look into purchasing both a life insurance policy and a personal accident insurance policy. Life insurance should be the cornerstone of your protection plan, while a PAI policy should supplement your coverage.