The very thought alone is terrifying: your death or dismemberment in a serious accident that leaves your family in dire financial straits. No wonder a "personal accident" insurance policy that pays out a lump sum of up to £500,000 tax-free can seem tempting.
But as another financial services giant - Barclays - gears up to embark on a marketing and sales push for this product, some critics are warning consumers to steer clear.
Personal accident insurance is usually already packaged into other existing policies for travel, car and even household insurance, and it is often given away free with credit cards. It also has a low "claims ratio" (the proportion of money paid in claims against that in premiums) that was picked up earlier this year by the Financial Services Authority (FSA).
"Given that this insurance is [often] given away as a freebie, I don't see why consumers should pay for it at all," says Richard Mason, a director of price comparison website Moneysupermarket.com. "In terms of insurance policies, I would put it right at the back of the queue - it's absolutely useless. It's one of those products that you have to ram down people's throats before they'll buy it."
The cover is designed to pay out if you are severely injured or die in an accident. Policyholders receive a tax-free lump sum if they are involved in an accident resulting in the loss of one or more limbs, one or both eyes, the loss of use of any of the above, or some other form of permanent disability.
Depending on the type of disability, the payments may be made weekly for one or two years, or as a lump sum, and the policy can be extended to a spouse and children, although the payouts are lower.
Putting a price on the loss of limbs, eyes or other parts of your body incurred during an accident is a macabre business. For example, a stand-alone personal accident policy from Nationwide building society costing from £4.95 a month will pay £2,500 for loss of use of one toe; £7,500 for one thumb; £12,500 for one shoulder; £50,000 for loss of sight in one eye; and £100,000 for permanent total disability. If you die in the accident, it pays out £10,000.
However, unlike life cover, it won't pay out if you die from an illness or natural causes. Most policies also won't pay out if there was an element of "wilful exposure to danger". This, say, would include swimmers who could be argued to have clearly ignored warning signs such as a red flag warning of choppy seas but go swimming and then drown.
Policies vary between insurers but, for example, Nationwide won't pay out if you suffer an accident as a result of riding or being a passenger on a motorcycle, or mountaineering, rock climbing or parachuting. And despite steady annual accidental death figures - 240 in the workplace; 4,000 in the home; about 3,200 deaths on roads - the Royal Society for the Prevention of Accidents points out that it's mainly the elderly and the very young who are most vulnerable.
Simon Burgess at broker British Insurance says that, on top of life cover, money spent on personal accident cover premiums "can be better used elsewhere to buy proper cover such as income protection" that pays out a regular monthly premium until you return to work or retire.
"Don't forget that your employer may also offer [personal accident cover] as part of sickness and life cover; there are very many better ways of spending that £8 [on average] premium each month."
Earlier this year, an interim FSA review of the insurance market monitoring the way consumers buy general insurance policies included a number of warnings on personal accident insurance. "There may be a risk that customers buying [it] may not understand the limitations ... compared with full private medical insurance," the report said. "While personal accident cover and healthcare cash plans are simpler, consumers may be less focused on their core end value."
The regulator also emphasised its anxiety over the low claims ratio, suggesting that it could be down to "excessive prices" and a "lack of competition".
A separate FSA review this year on "cold calling" saw the regulator criticise poor sales standards for products such as personal accident insurance, and warn that the benefits were "sometimes exaggerated".
The stand-alone policies are on offer at a number of high street banks and building societies including NatWest, Barclays and Nationwide, and also at retailers whose industry tends to see plenty of incidents: the RAC, for example, and B&Q, where the latter offers greater payouts for accidents as a result of DIY or gardening activities.
It's the ubiquity of the product that causes the doubling up of cover, adds Burgess. "You already get an element of accident insurance with motor and with household and travel."
For example, Barclays already sells personal accident insurance in other policies - up to £30,000 in its travel policy, and up to £2,500 with its car insurance, as well as up to £500,000 on its stand-alone policy.
Many credit cards such as Egg, Virgin Money and NatWest also offer up to £100,000 of "travel accident" insurance that pays out if you die or incur an accident while on transport paid for using the credit card.
This isn't too much of a problem, however, according to Peter Staddon, technical director at the British Insurance Brokers' Association. "People often need a top-up but there is lots of overlapping [so] see a financial adviser. I'm not saying 'buy it', and for some people, it's not relevant; but it can be hard to work out."
