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Life Insurance vs. Disability Insurance vs. Accident Insurance (what's the difference)


May 8, 2013

When you open a new bank account, often the bank will try to sell you on purchasing additional insurance. Sometimes, that insurance is complementary. Be careful.The same can be offered through your workplace. People think that their job comes with benefits. But when those policies and benefits are further examined, we quickly learn that those policies and benefits don't cover everything you thought they did. The effect is that it creates false sense of security for policy holders that they are protected, when in fact, they aren't.

I've had lots of people tell me that their employer or their credit card covers them for accident insurance. Then, while on a beautiful Carribbean vacation, they get in to a catastrophic car accident. You or a loved one might have broken some bones, or got pretty badly hurt. You figure that your medical bills will be taken care of. But, upon arrival at the hosptial, it turns out that your bills are NOT covered by insurance.

Or, it might turn out that only $500 in medical bills are covered, but the rest isn't. When the hospital bill runs in to the tens of thousands of dollars, that's a big hit to take. What's even worse is finding out that the doctors won't treat you until they've recieved the money. Personal cheques won't cut it out there. They want cold hard cash; preferably US bills. Legal advice: cheque with your so called travel insurer before going away on vacation and find out what's covered and what isn't so that you don't get hurt twice.

If your travel insurance isn't very comprehensive (insert negative explative here), then spend the $50 or so and buy some additional coverage.

Which leads me to my next point. Just like you should check out the basic details of your travel insurance, you should also be familiar with the basics of your life insurance, accident insurance or disability insurance policies.

For starters, many people think that accident insurance is the same as life insurance. The answer to that question is a resounding "NO". Many accident insurance policies contain provisions that if the death is caused by natural causes, then no benefits will be paid under the policy. Accident insurance is meant to cover accidents. If there is a death on account of old age, disease, or other natural causes, then no benefits will be paid which is bad news for you.

Insurance companies will stop at no lengths to show that a death under an accident insurance policy was of "natural causes". There may have had a pre-existing condition you didn't know about which caused or contributed to the fatality. High blood pressure? Blood clot you didn't know about? All of those things are natural which an insurer might use against you to deny your claim. I've seen insurers retain neurolgists, cardiologists along with a variety of pathologists to examine medical records of the deceased benefit claimant to disprove their claim.

Life insurance on the other hand, covers death which occurs from natural causes. You should know that all of the life insurance policies I've seen also contain exlcusions for suicide or death by drugs, alchohol, and war. Some policies even contain exclusions if you participate in bunjee jumping, parachuttting, MMA, race car driving or other extreme sports where you put your life at risk. If you want coverage for such activities, you will have to pay extra. Speak with your broker or speak with your lawyer about what's best for you.parachute.jpg

You can only imagine the difficult conversations this personal injury lawyer has to have with family members of the departed only to point out these exclusions. This is the very nature of reading the fine print. It's not fair. Particularly when the person who took out the policy didn't speak or read English, and didn't know what they were getting in to. It's also not fair because the deceased had been paying out premiums for so long and thought that they were covered. But, that's how insurance law and insurance coverage works. The entire nature and spirit of a policy can turn on one word, one clause, one paragraph. It's all very technical, and very unfair to people who don't understand their policies. But let's be honest. Who really understands their policy? Not many people. Even some of the best lawyers around don't know what they're paying for sometimes. They just put their trust in their agent, and try not to think about it.

The same theories also apply to Disabilty Insurance. Most policies offered through employers as perks to employment are terrible. They might only cover 66% of your pre-disability NET wages, and might only last for 3 years. They might also contain exclusions preventing claims on account of psychological injury or soft tissue injury. Again, these policies give employees a false sense of security. When the realities of how the policy actually works is explained and confronted, the reality can be devastating.

Well, the Toronto Maple Leaf game is set to begin shortly. It's nice seeing everyone in Toronto supporting the home team and being so enthusiastic. I hope the ownership in Toronto appreciates the buzz created when the team makes the playoffs and performs well; so that they continue to make a concerted effort to put out a competitive team year after year. Waiting 9 years for the playoffs in the "mecca" is unacceptable.

If you have any questions about how your long term disabilty claim, life insurance claim, critical illness claim or any other insurance question, please don't hesitate to contact Goldfinger Personal Injury Law at 1-877-730-1777 or by email at info@goldfingerlaw.com and we will do our best to answer your questions.