This article is an informative guide on group personal accident insurance in Malaysia, a type of insurance that can protect groups of people from the financial impact of accidents.
Also, don’t miss out! – we’ve got a cool free consultation offer for your business insurance needs. Check it out at the end of this article!
Table of Contents
What is Group Personal Accident Insurance and How Does It Work in Malaysia?
In Malaysia, Group Personal Accident insurance, or GPA for short, is a type of insurance that provides coverage for a group of people such as employees of a company, members of an association, or students of a school etc. The coverage helps to protect the group members from the financial impact of injuries, disabilities or death from accidents. The coverage operates 24 hours a day, 7 days a week and not limited to work related injuries unlike SOCSO.
The key trigger for this insurance coverage is “accident“. The common definition of accident used for insurance purposes is “a sudden, unforeseen and fortuitous event“. However, a layman’s basic understanding and description of “accident” would suffice.
GPA insurance is usually purchased and managed by the group leader, such as the employer of a business, on behalf of the group members e.g. employees. The group leader will arrange the insurance coverage and pay the premium to the insurance company and receives a master policy that covers all the group members. The group leader is responsible for notifying the insurance company of any changes in the composition of the group membership (such as new joiners or leavers) as well as potential claims.
What are the Types of Coverages Available?
There are mainly 4 types of coverages for GPA insurance policies in Malaysia which are Death and Permanent Disability, Medical Expenses, Funeral Expenses, and Temporary Disability.
Death and Permanent Disability
This covers the most severe outcome of an accident e.g. death, loss of limb(s), loss of use of limbs (such as paraplegia), loss of vision, etc. The insured persons (or their beneficiary) would be awarded a lump sum payment or a percentage of the lump sum payment depending on the severity of injury following the accident. Death would entail a full lump sum payment (100%) whereas a loss of finger would entail a much lower percentage.
Medical Expenses
This covers the cost of medical treatment, hospitalisation, surgery or medical procedures in regard to injuries sustained following an accident. This sum usually is a nominal sum at about 1% of the sum insured for Death and Permanent Disability. However, the highest we have seen was 12.5% of the Death and Permanent Disability sum insured but that was a unique case. This coverage is mostly targeted towards minor injuries or treatment at Malaysian Government Hospital where the treatment is heavily subsidised by the government.
Funeral Expenses
This category covers the costs of funeral services, burial, or cremation due death following an accident. The insured person’s beneficiary will receive a lump sum payment in case of such an event. The amount of payment is usually a fixed amount. For example, a plan may pay RM 2,000 for funeral expenses per insured person.
Temporary Disability
This coverage, also known as the “MC Insurance”, compensates the insured person’s temporary absence at work as prescribed by a medical certificate from a registered medical practitioner. This category aims to cover the loss of income or earning capacity due a covered accident for the period he/she is unable to work. The absence as well as the medical certificate has to be a result of a covered accident in order to enjoy the benefit of the coverage.
The insured person will receive a one lump sum payment after the end of his MC period for the amount of weeks he/she was unable to work. The amount of payment is usually a fixed amount agreed by the group leader and the insurance company. For example, a plan may pay RM500 per week for temporary disability.
Who Can Benefit from this Insurance?
Group personal accident insurance can benefit various groups of people in Malaysia. The most common group of insured persons are employees of a business, members of an association and students of education institutions.
Employees of a Business
This is the most common group of insured persons for the purposes of GPA insurance. Employees of a business do face various dangers in their daily duties especially if they are in the manufacturing line. However, regardless of your employee’s occupation, most of them are exposed to the possibility of suffering an accident whilst traveling to and from work. In addition to that, they may be required to travel out-station frequently for business purposes, which increases the risk of suffering an accident. Here is an article in regard to insuring your sales team and what you need to know.
Members of an Association
Members of an association, such as a clubs and societies may be insured under GPA insurance. This is particularly handy if the association is one that involves physical activity or participates in group outings, trips, or competitions, which may expose them to potential accidents. Group personal accident insurance can cover them for any injuries or losses that may occur during their group activities. However, some insurance companies do limit their coverage in regard to sports and physical activities, hence, seek clarification from your agent / broker!
Students of Education Institutions
It is not uncommon for education institutions in Malaysia to purchase GPA insurance for their students. Students who attend a school may encounter various risks in their academic or extracurricular activities, such as accidents in the classroom, laboratory, playground, or field. In addition to that, they may also join school trips or camping trips which may involve some dangers. These exposures are more common for students in vocational schools as they do handle hardware tools and heavy machineries as part of their leaning process.
What is the Optimal Amount of Coverage?
The optimal amount of coverage for personal accident insurance varies depending on the type and size of the group, the nature and extent of the risks involved, and the budget and preferences of the group leader. However, some general guidelines can help you estimate the amount of coverage that suits your group’s needs.
Optimum Coverage for Employees
A common rule of thumb is to have about 5 to 10 times the annual salary of each employee as the coverage amount for personal accident insurance in regard to Death and Permanent Disability coverage. The goal here is to reduce the negative effects of a accident as much as possible via financial means. This is especially true so if the accident was a terrible one and would cost the employee his/her life and/or ability to work permanently.
In regard to Temporary Disability, we generally recommend a figure between half and up to their weekly wage.
However, these rules may vary depending on the industry, the occupation, the age, and the health of the employees and your budget. You should consult your insurance agent/broker to get a more accurate and personalised assessment of your employees’ insurance needs.
Optimum Coverage for Students and Members
In regard to insuring students and members of schools and associations respectively, one must look at the age groups of the students and members. Generally, younger individuals (below 18 years old) tend to be insured for about RM20,000 and up to RM50,000 for Death and Permanent Disability. As for students and members above 18 years old, they tend to insure about RM50,000 and up to RM 100,000 per person as the coverage amount for Death and Permanent Disability.
Generally, we would not recommend getting the Temporary Disability coverage as that tends to be a specialised coverage for a business designed GPA policy. This is emphasised by the point that the Temporary Disability does cost extra.
Similarly to the guide for employees, these rules may vary depending on the type of leaning institution, theme of the association, and your budget. You should consult your insurance agent/broker to get a more accurate and personalised assessment.
How Much Does Group Personal Accident Insurance Cost and What Affects it?
Group personal accident insurance is a very affordable class of insurance compared to other types of insurances. It comes at a low cost but provides great coverage benefits that you and/or your group may need in the event of a dire accident. Here are some of the factors that affect the cost of group personal accident insurance:
Level and Scope of Coverage
The cost of group personal accident insurance depends on the level and scope of the coverage that the group chooses. The level of coverage refers to the sum insured for Death and Permanent Disability whereas the scope of coverage refers to the types of coverage that the insurance company will cover e.g. Temporary Disability.
For example, a group may choose a basic coverage that pays a lump sum in case of death or permanent disability, or an extended coverage that pays additional benefits in case of temporary disability or extra medical expenses. Also, a group may also choose a comprehensive coverage that covers more accident-related event that are generally excluded such as sports or operation of heavy machinery. The higher the level and the wider the scope of the coverage, the higher the premium that the group has to pay.
Occupation Classification of Employees
The cost of group personal accident insurance for businesses varies depending on the nature of business and occupation of the employees. For example, a group of office workers would be charged a lower rate than a group of factory workers performing manual labour. The said factory workers face higher risks of accidents due to the very nature of their work. The insurance company will assess the risk profile of the group and determine the appropriate premium rate based on the nature of business, and occupation of the employees.
Theme of Association
Similarly to employees, the rate to be applied to an association or club depends on the theme / nature of the said association or club. A group of sports enthusiasts may pay a higher premium than a book club, as the former engage in more hazardous activities in their leisure time.
Claims History
The cost of group personal accident insurance also depends on the claims history of the group. The claims history refers to the number (frequency) and amount of claims (sum) that the group has made in the past 3 to 5 years. The insurance company will review the claims history of the group and adjust the premium accordingly. If a group has a high frequency or severity of claims, the insurance company may increase the premium to reflect the claims history. On the other hand, if a group has a low frequency or severity of claims, the insurance company would usually charge a lower rate.
What is the Best Group Personal Accident Insurance?
There are not many differences between group personal accident insurance plans offered by insurance companies in Malaysia. The plans offered largely have similar base features and benefits, such as coverage for death, permanent disability, temporary disability, and medical expenses. Also, the amount and scope of the coverage, the premium rate, and the exclusions and limitations of the policy are also similar.
Unique Coverages
Some insurance companies do offer unique coverages that may suit your group’s needs. For example, some group personal accident insurance plans may offer a lump sum payment for burns of 2nd degree onwards. These unique coverages may sound enticing but they do tend to be merely a supplemental coverage.
A Correct Policy is the Best Policy
Our biggest tip is to focus on getting your policy rated correctly to your occupation, plan the level and scope of coverages accurately, and ensure it all fits in the budget. This promotes sustainability and reduces overpaying insurance premiums.
In the event that your policy is not correctly done, you risk getting your claim rejected. Your Group Personal Accident insurance claim may be rejected on, amongst others, grounds of wrong occupational classification, which defeats the whole purpose of purchasing it in the first place. Do not risk saving a few Ringgit at the cost of the core functionality of the GPA insurance.
We recommend consulting a good insurance agent / broker to get a more accurate and personalised assessment of your group’s insurance needs. This would also ensure that your policy is done well to avoid complications during a claim.
Does Group Personal Accident Insurance Conflict Against SOCSO/PERKESO?
Group Personal Accident insurance does not conflict with SOCSO (Social Security Organization) aka PERKESO (Pertubuhan Keselamatan Sosial)’s Employment Injury Scheme for the most part. Employees of a business can enjoy most of the benefit of both schemes.
Death and Permanent Disability Benefits
In our experience, employees of a business can enjoy the benefits of both group personal accident insurance and SOCSO in case of death or permanent disability due to an accident. The said employee can claim the benefits from both insurance and scheme without any conflict or penalty. For example, if the employee suffered permanent disability following an accident, he would be able to claim the lump sum benefit of the group personal accident insurance plan and the disability benefit via SOCSO’s Employment Injury Scheme that pays, for example, RM300 per week.
Medical Expenses Conflict
Both group personal accident insurance and SOCSO’s Employment Injury Scheme can cover the costs of medical treatment due to an accident. However, you should be claiming the benefits from one at a time, and should not claim the same expenses from both insurance and scheme. This is to avoid profiting or claiming double re-imbursement of your medical bill. At best, you may try to submit a subsequent claim application to the other scheme/program as a top up from the initial scheme submission.
SOCSO’s Limitations vs GPA
The biggest limitation of SOCSO’s scheme coverage in comparison to group personal accident insurance is that SOCSO is only limited to injuries arising from work related accidents only. The accident must occur during the course of employment, or while travelling to or from work. For example, if you get injured by a machine at work, or get involved in a road accident while travelling to work, you can submit a claim to SOCSO. However, if you get injured while at home or while travelling during a holiday, your claim to SOCSO would likely be unsuccessful.
In contrast, group personal accident insurance covers injuries arising from accidents that occurs 24/7. This coverage is regardless of whether the accident is work related or not. For example, if you slip and fall in your house, or get hit by a car as you were walking on the street, you should be covered under your group personal accident insurance.
Why should Businesses Purchase GPA Insurance for their Employees?
Attract and Retain Talent
Employers and potential employers may use employment benefits such as Group Personal Accident insurance coverage to attract and retain talent for their workforce. In the competitive labour market in Malaysia, employment benefits such as Group Personal Accident insurance may be the one thing that tip the scales to your favour in terms of retaining employment of existing employees as well as attracting new talent. This may be the edge you require to be competitive in the employment market!
Reputation and Image
Another reason why businesses should purchase group personal accident insurance for their employees is that it can enhance their reputation and image in the market and society. By purchasing group personal accident insurance, you can show that your business is responsible and caring employers who value the well-being and safety of their employees.
It can also demonstrate that your businesses are socially and ethically conscious and committed to the welfare of their employees and their families. By having group personal accident insurance, businesses can gain a competitive edge and a positive reputation among their customers, partners, suppliers and investors.
Free Consultation!
We have been talking a lot about Group Personal Accident insurance in Malaysia, but we couldn’t cover everything in our article. There’s still a lot more useful stuff to learn!
Therefore, we have a great offer for you – a free 30-minute chat with our insurance experts! This is usually worth RM1000, but we’re giving it to you for free!. But here’s the thing: We can only offer this free talk to two businesses each week. So, it’s pretty special!
Sign up for your free session today via this link! This isn’t just a regular chat; it’s a big chance to make your business better.
