Accelerated Vs standalone cover structure. | Protection Solutions

Accelerated Vs standalone cover structure.

Accelerated Vs standalone cover structure.

March 5th, 2021

You may have heard the terms accelerated vs standalone insurance benefit cover, but do you know what this means? Essentially insurance benefits such as critical care, Total and Permanent Disability or Cancer covers can be structured in two ways: accelerated vs standalone. We are going to discuss the difference between these two types of benefits and explain how they work so you can determine if either one is right for your needs.

Accelerated benefits are based on Critical Care, Trauma and Total and Permanent Disablement lump sum benefits.

Accelerated Benefit:

An accelerated insurance benefit is a payment that comes off the total sum of your life insurance if you make a claim. Accelerated benefits may reduce your overall life insurance cover, however they can be a cheaper option for giving you cover in more circumstances. You may also be able to buy back the reduced life cover later.

For example, with Cigna you can get Trauma Cover that can be ‘accelerated’ against Life Cover. What this means is that in the event of a claim for your Trauma Cover, the amount paid for the Trauma will be deducted from the balance of the Life Cover sum insured. If you have your trauma claim accepted, the amount paid out to you will come off your Life Insurance. This structure reduces the original premiums for the accelerated cover compared with a standalone cover structure.

A Standalone Benefit:

A Stand-Alone benefit is just that – a benefit that sits on its own and does not reduce any other benefits you may have if you make a claim.

For example, with Cigna you can get ‘standalone’ Trauma Cover which means that any Trauma Cover claim paid is independent of any life cover. If you are diagnosed with one of the illnesses or conditions listed and make a valid claim on your Trauma Cover, you will be paid out as the lump sum without affecting your other insurances (including any other existing Life Insurance).

Accelerated versus standalone benefits:

Does your current cover have accelerated or standalone benefits? It is important to determine whether the benefits you currently have in place are accelerated or stand-alone benefits as this can have an impact on your overall covers when it comes to claim time.

They each have there place, if you hold cover for debt repayment only then having an accelerated benefit may work well for you, it would pay back debt in the event of a claim.

If you have your trauma or total and permanent disability to fund your lifestyle in the event of a claim, then standalone cover will be the best option.

Generally, the accelerated option has a lower price as well.

We hope this has given you a better idea as to what accelerated and standalone cover is. However determining which insurance provider to use, which type of cover to go with, or which is the best policy for you is not that simple. As your insurance adviser we will walk you through your situation, options, and concerns, and determine the best policy for you. Contact us here or email us at wellingtonoffice@protectionsolutions.co.nz to find out more.