A PA policy also known as personal protection plan is an annual insurance cover providing compensation in the event of injuries, permanent, temporary, total or partial disablement, or death caused solely by violent, accidental, external and visible events. The plan also covers medical expenses, corrective surgery, hospitalization benefits and funeral expenses arising from accidents.

Most PA policies come with 24-hour worldwide insurance protection and various packages. Some cover accidental death only while others include disabilities and some with special coverage for high-risk individuals. There are also stand-alone PA policies as well as riders to life insurance plans.

Individuals, families and groups, can take up PA policies, as do most employers for their employees. Although there are many variations of the plans, PA policies essentially cover the insured and their beneficiaries in the event of accidental death or disability due to disease. Coverage depends on how much premium is paid.

It is important that you know what your PA policy plan covers and excludes. This will help you make an informed decision and also avoid disputes in the event of a claim. PA policies are very specific in the coverage of insured risks- if it states that it insures against death and permanent disability caused by an accident, the keyword here is 'caused by accident' as there will be no compensation for death or disability caused by other factors. Death in childbirth or disease for example, is not included.

It is crucial to note the list of exclusions under a policy. Standard exclusions in most plans include war, riot, self-inflicted injury, suicide, AIDS, injury or death resulting from participation in unlawful events, provoked murder or assault and hazardous sports. It is important for you as the consumer to read the clauses on pre-existing illnesses, as it will outline the exclusions and extent on an insured risk. PA policies with medical expense coverage are not valid for illnesses or ailments. PA policies will also exclude coverage for certain high-risk category individuals- as these people are usually involved in risky activities such as extreme sports, diving and law enforcement during war or riots.

PA policies with add-on medical and hospitalization benefits work in tandem with the driving principle of personal protection plans- it pays only for accidental injuries and death. Generally, the higher the risk insured, the more the premium costs, but the decision to protect the high-risk group lies with the insurer and is done on a case-by-case basis.

The most crucial part of all PA plans is the scale of benefits, that refers to the amount payable in the event of injury or loss of limb, loss of sight or hearing and the proportion of compensation vis-á-vis the loss suffered.

The scale of benefits for most basic PA policies is rather standardized but may not be the same as each insurer may fix a different claimable amount for the loss or disablement, depending on the underwriting practice and plan type. For example, the loss of one eye can be fixed at 100% of the insured sum, while another insurer may only pay 50% of the insured sum (100% for both eyes). It is best that you compare the scale of benefits offered by different insurers.

Also, personal protection plans are benefit plans, unlike indemnity policies like fire or motor insurance. This means that one cannot put a definite value to an individual's life or on the loss of a body part. The sum insured usually also depends on the individual's annual earnings. As a rule of thumb, an individual's annual earnings multiplied by about 6 to 10 times indicate the highest insurable sum for a PA policy.

Although Malaysians are fairly familiar with PA policy plans, many are still unsure about the difference between PA and health insurance. Some even assume that having either one is sufficient protection against health/medical and accident-related risks.

Medical insurance usually covers a broad range of health risks, while PA specifically protects against injury, disability or death caused by accidents. Unlike a PA policy, the sum insured in a medical and hospitalization policy is not based on one's earning capacity but on the limitations of hospital ward charges, surgical cost, specialist treatment and others. Risk coverage through a PA policy is available 24-hours daily while normal medical plans provide global protection only in the first 90 days of travelling.

PA policies are also available at affordable process as opposed to life insurance policies. Insurers also usually pay a lump sum to policyholders and/ or their beneficiaries in the event of a claim. Hospitalisation plans are designed to only compensate the actual cost of treatment and has no lump sum payment aspect.

Knowing that accidents happen anywhere anytime and anywhere and that we are constantly exposed to risks, are personal protection plans a must? Ideally, says the representative of the general insurance association of Malaysia (PIAM). One must not be over dependent on PA policies cautions others as the coverage is limited to accidental injury and death. Although many PA plans are extending their accidental injury and death to assault, murder, kidnapping and other risks, it is important to know that PA policies do not replace traditional health plans.

If you can afford it, take up personal protection plans to complement existing medical policies to spread medical costs between two plans. Stand-alone PA plans, which are generally much cheaper than PA riders attached to life plans, must be renewed yearly for continuous protection and there will be no gain on premiums paid unless a claim is made. PA policy premiums are not refunded if a claim is not made.

Although PA policies are generally more affordable compared to medical or life insurance policies, cost alone should not be the sole deciding factor. The decision to buy a PA policy should be made after careful consideration of the many different issues as discussed.