Accidental Death Benefit Explained

Eric Van Haaften Term Life Insurance

Many people are concerned about what would happen if they die or suffer an accident that leaves them disabled.

If they aren’t, they probably should be. Would their loved ones be able to afford to take care of them? Would they have money to pay medical bills or funeral expenses?

Accidental death insurance is a policy that can provide some peace of mind in case the worst happens.

Read on to learn more about accidental death insurance and how it can help your loved ones in case of an unexpected death.

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What is accidental death insurance?
Who needs an accidental death benefit policy?
Who should buy life insurance for accidental death?
What is a death and dismemberment policy?
Should you add an accidental death benefit rider?
What is the difference between life insurance vs. AD&D?

What is Accidental Death Insurance?

Accidental death insurance is a policy that provides a lump sum payment on behalf of the insured exclusively in the event of death due to an accident of any kind.

Death from illness is not covered. Death from natural causes isn’t covered either. The policy only provides coverage for death due to an accident at or outside work.

The benefit is paid in a lump sum or over time depending on the policy. Accidental death policies commonly offer coverage as high as a $1,000,000 death benefit.

pros and cons of accidental death and dismemberment insurance

Who Needs an Accidental Death Benefit Policy?

Accidental death benefit policies are more accessible than traditional term life insurance due to minimal medical exam requirements.

Since they provide coverage specific to accidental death, they are less expensive than a typical term life insurance policy.

Accidental coverage can benefit someone who may lead a riskier lifestyle or work dangerous jobs.

reasons for purchasing accidental death insurance

First, the policy can provide peace of mind for your beneficiary in an accidental death.
Secondly, the policies are relatively low-cost. It can be a rider on an existing policy or a standalone policy.
Finally, this can be an excellent opportunity to get coverage if none exists. The process usually costs less, is quicker, and doesn’t have the medical requirements of traditional life insurance.

Buying Life Insurance for Accidental Death

Life insurance will pay out if you die under any circumstance, be it natural, accidental, or due to illness.

You may be able to add an accidental death rider to your life policy. The rider will only kick in in the event of accidental death.

If you have or want both types of life insurance coverage, it may benefit you to keep them separate so they don’t cancel each other out.

While a life policy will provide accidental death coverage with or without the rider, it costs more and usually requires a medical exam and a lengthy application. These requirements take time to complete.

A standalone accidental death benefit policy can be quickly acquired, requires no medical exam, and you cannot be turned down for coverage.

AIG currently offers an excellent standalone accidental death benefit policy with policies available for people aged 18-80.

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Accidental Death and Dismemberment Insurance

An accidental death benefit policy can help cover the costs of final expenses and medical bills if the policyholder dies in an accident.

A death and dismemberment policy also covers you if you are seriously injured in an accident. AD&D insurance is very popular with those who live or work in the most dangerous jobs.

accidental death and dismemberment payouts explained

Unlike accidental death policies, death and dismemberment policies offer partial benefits for losing one part of your body and full benefits for losing several parts.

For example, if you lose both hands and feet, you’d receive 100% of the benefits.

However, if you lost one hand and one foot, you’d get half of the benefits. Policies also cover injuries to the eyes, ears, and speech due to a covered accident.

They still cover accidental death but offer additional coverage for injuries.

One of the critical advantages of accidental death and dismemberment insurance is that it can provide coverage in cases where life insurance policies would not.

For example, if a policyholder suffers an accidental injury due to a car accident, they would be covered under their accidental death and dismemberment policy but not under their life insurance policy.

Some other examples covered by AD&D policy are work-related accidents, poisoning, falls, suffocation, choking, drowning, and fires.

AD&D insurance also covers wounds or deaths resulting from an accident while riding as a passenger on a bus, train, airplane, or taxicab.

What Is Not Covered by AD&D Insurance?

Most AD&D Insurance policies do not cover injuries or casualties caused by surgery, mental illness, physical illness, drug overdose, drinking and driving, suicide, or those suffered while engaged in high-risk hobbies, or acts of war.

We always recommend looking at the specifics of your policy if you are in a high-risk occupation or participate in dangerous hobbies like sky diving or scuba diving.

Adding an Accidental Death Benefit Rider

Adding an accidental death benefits rider to an existing policy can be an inexpensive and quick way to increase your coverage.

Riders most often cannot be separated from the base policy they have been added to. So, if you cancel your auto policy with the accidental death benefits rider, that rider is usually canceled as well.

Not only can you add the accidental death benefit rider to other policies, but some carriers offer a way to increase the amount of coverage the rider provides.

A double or triple indemnity rider will double or triple the accidental death coverage benefit amount.

For the accidental death rider to work, unintentional death has to occur as a passenger on public transportation such as a bus, train, or plane. Coverage may even extend to an elevator inside a building on fire.

No one ever expects to die prematurely, but the fact is that accidents happen every day. That’s why it’s essential to have accidental death insurance if the unexpected happens.

An accidental death rider or insurance policy can provide peace of mind knowing that your loved ones will be taken care of financially if something happens to you.

Life Insurance vs. AD&D

The distinction between life insurance and AD&D insurance is straightforward.

The two primary types of coverage, term and permanent life insurance, pay a tax-free death benefit regardless of the cause.

A low-cost term policy is called a yearly renewable term, which provides a level death benefit with a premium that will increase yearly.

While a level-term life insurance policy offers guaranteed death benefits and premiums that remain the same for between 10 and 40 years.

Permanent coverage protects you for your entire life and has higher premiums because they offer tax-free cash values that accumulate over time.

While still life insurance, an AD&D insurance policy will only pay out for death or dismemberment caused by accident.

Is Accidental Death Insurance Worth It?

An accidental death insurance policy may not be required for everybody, especially if you already have a policy.

If you desire additional security, adding an affordable stand-alone accidental policy or an ADB rider is a great idea.

These accidental policies should not replace the full benefits offered by term life, universal life, and whole life insurance policies.

Plus, many young, healthy buyers can buy a cheap term insurance policy covering accidental and natural deaths at a similar pricing to pure accidental coverage.

Comparing various term life insurance plans can assist you in estimating the costs and finding the most appropriate policy for your needs and budget.

Accidental coverage is a popular alternative for people working in dangerous jobs or who cannot get traditional life insurance because of pre-existing medical conditions.