IF2 - Module 2

Question 1

What does Personal accident and sick (PAS) insurance cover?

Answer 1

Personal accident and sickness (PAS) insurance pays fixed benefits if the insured suffers an accident is off work due to sickness.

Question 2

What determines the level of cover with regards to Personal accident and sickness cover?

Answer 2

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.

Question 3

What is indemnity?

Answer 3

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

Question 4

How do insurers set a Personal Accident and Sickness insurance benefit?

Answer 4

The insurer sets the insureds weekly benefit at a level below the insured’s normal earnings to encourage the insured to return to work.

Question 5

What is the definition of an accident within a PAS policy

Answer 5

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

Question 6

What does the accident section of a PAS policy cover in the event of accidental death or bodily injury?

Answer 6

• 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.

Question 7

What does sickness cover for a PAS policy look like?

Answer 7

• 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

Question 8

What length of time after an accident can the insured die to still be eligible to claim?

Answer 8

12 months

Question 9

What are the typical exclusions of a personal accident and sickness policy?

Answer 9

• 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