Personal accident insurance

I encourage all young people to buy a personal accident insurance to cover $100,000 for an annual premium of less than $100 (for most occupations).

Here are the reasons:

1. It is easy to buy this insurance. You do not have to provide any information about your health status or to take a medical examination.

2. Most young people face an accident risk. They are unlikely to face a health risk, until they are much older.

3. You can invest your savings in a diversified, low cost equity fund to get a better return. Most of the return goes back to you, instead of being spent on agent commission, expenses and profit for the insurance company.

4. Do not buy your life insurance too early, especially the costly plans, such as endowment, whole life or critical illness. You can think about life insurance later, when you have started a family. At that time, you can make a better choice. You will learn that it is better to buy Term insurance.

5. If you wish to buy Term insurance earlier, it is also appropriate. Term insurance covers death from accident and sickness, and is slightly more expensive than accident insurance. It does not cover permanent and temporary disablement (unlike personal accident insurance).

6. The cost of personal accident insurance is so low, that you do not have to think twice about it.