Accident Insurance vs. Disability Insurance

Which one is right for me? We explain similarities and differences

Article

4 minute read

2020-06-03

Personal accident insurance supports you if you are permanently disabled after an accident. But what if the accident means that you can no longer continue in your job? Would accident insurance still be the right choice? Or would disability insurance be more appropriate? Deciding which insurance best suits your individual situation is not easy. We compare both types of insurance to help you make the right choice.

Accident insurance or disability insurance – what’s the difference?

Let's take an exmaple. Your car skids on a wet road and rolls into a ditch. Your arm is injured, and even after a few operations and rehabilitation, it now only has limited mobility. If you have a job where you work with your arms, this could be a problem as you might be forced to change your profession. Both accident insurance and disability insurance could pay in this case. But there are quite a few important differences between the two.

How comprehensive is the protection?

Disability insurance is considered to offer the best cover for illness-related absence from work. Its big advantage is that, if you are unable to work for over six months, disability insurance will support you financially. It covers any health condition as long as it restricts you by at least 50 percent in your ability to carry out your current job. For example, a surgeon who loses feeling in their right hand after a stroke will no longer be able to perform surgery. But disability insurance doesn’t just cover physical health conditions. It would also cover a manager who becomes unable to work due to a stress-related issue. Many cases of occupational disability are not caused by an accident. So in contrast to accident insurance, disability insurance covers many more risks. In 90 percent of cases, illness is what prevents the person from doing their job. Accidents only account for around 10 percent of cases.

Accident insurance is better suited to extreme situations. It protects you if you are involved in an accident that has long-term consequences for you. It also covers you for minor disabilities where you are still able to work more than 50 percent. However, accident insurance is not a direct substitute for disability insurance. To put it simply: In most cases where accident insurance pays, disability insurance will also pay. But the reverse is not true.

Are you interested in getting disability insurance? Talk to an expert:

Despite disability insurance covering a wider range of risks than accident insurance, there are a few things to look out for.

Comprehensive protection doesn’t come cheap

Because disability insurance covers more risks, insurers charge more for this comprehensive cover. So what increases the cost of the monthly insurance premium? As with accident insurance, you choose the maximum amount of money you will receive from the insurer in the event of a claim. If you choose a higher disability benefit or a high lump sum payment for accident insurance, the costs can quickly rise. With disability insurance, you also decide up to which age you want to receive disability benefits. The longer you want to receive benefits, the more expensive the insurance. A few years make a big difference here. For example, if you only receive your disability benefits up to your 65th birthday instead of your 67th, you will save 15 percent.

The price of accident insurance and disability insurance also depends on how risky your job is. People working in more physical professions, such as craft workers, technicians, plumbers and farmers, will have to pay more for both types of insurance. Desk jobs are considered less risky and can still be done by people with some physical impairments. For this reason, disability insurance and accident insurance are cheaper for doctors, salespeople and anyone who mainly works in an office.

But physical exertion and risks are also relevant outside of work. This is why insurers also take an interest in your hobbies. Do you get your dose of adrenaline by kayaking through wild waters? Or are you known for your daring snowboard stunts? If you do extreme sports, some disability insurance providers may require you to pay high additional costs to cover the risk. How risky each provider classes certain activities can vary greatly. If you are unsure, it might make sense to make an anonymous risk enquiry. You can expect higher premiums if you currently have or previously had health conditions such as high blood pressure, neurodermatitis or back problems when signing up for disability insurance. The premium can also be higher if you smoke. Insurers may even reject your application for disability insurance due to previous illnesses or your leisure activities. And that brings us to another one of the insurance’s downsides.

Not everyone can get disability insurance

A few professions, such as stunt performers, performing artists, and professional divers and athletes, are excluded from both accident insurance and disability insurance. But apart from these specific job profiles, potentially anyone can get accident insurance.

However, with disability insurance, other factors can exclude you from cover. Some underlying health conditions such as HIV, rheumatism or cancer will prevent you from getting disability insurance. If you have received psychological treatment within the last five years before taking out a disability insurance policy, you will most likely be rejected by insurers. This is because depression and burnout are the most common cause of occupational disability. To find out whether you are eligible for disability insurance, insurers will ask you a series of questions as part of a health and risk assessment.

Underlying health conditions do not play such a big role in accident insurance. That’s why you are not asked about your health when you get accident insurance from Getsafe. However, if you have an accident involving an underlying health condition, the amount paid out will be reduced.

If you are unable to get disability insurance or are not prepared to pay the high premium, accident insurance can offer a good alternative for you. Accident insurance also has a clear benefit in that it pays you a larger benefit immediately after an accident. This can be particularly beneficial if you need to make adjustments to your home after an accident, such as installing a stair lift. Accident insurance also covers other ad hoc costs for services such as rescue operations or cosmetic surgery.

Think accident insurance is the right choice for you? Take a look at our accident insurance tariff:

Does a combination of disability insurance and accident insurance make sense?

There are two cases where it might make sense to get both disability insurance and accident insurance. For example, if you want the added protection of having a large lump-sum payment as well as a monthly benefit, then it could make sense to get both types of insurance.

Especially if you do extreme sports, your hobbies can make disability insurance very expensive. If the costs are too high for you, then you could insure your leisure activities with an accident insurance policy. The combination of the two policies could work out cheaper for you overall.

Regardless of what you do in your free time, it makes sense to find out what discounts are available. Some providers offer cheaper tariffs for people who have additional accident insurance.

What other options are there?

What if disability insurance and accident insurance are both out of the question for you? Fortunately, you might still find what you are looking for. There are a number of other policies on the market that offer you protection against accidents and illnesses. These include critical illness insurance and multi-risk insurance.

Still not sure which insurance is the right one for you? Get personal advice from an expert:

Author: Carina