While you can prepare for death due to old age or illness, a sudden death is, by definition, unexpected and can leave you with no time to protect your loved ones financially. Because of its unanticipated nature, accidental death can leave families in a very difficult financial position. Luckily, accidental death insurance’s lump sum payout can help relieve this burden and cover end-of-life and burial expenses. Before purchasing any policy, it’s important to understand what accidental death life insurance is and what it does and does not cover.
What is accidental death insurance?
Accidental death and dismemberment insurance (AD&D) is a no medical life insurance policy that pays out a death benefit if you are seriously injured or die from an accident. It requires one of two crucial aspects to receive a payout: accidental death or dismemberment.
The accidental death aspect of this type of life insurance ensures that beneficiaries receive benefits if the policyholder dies unexpectedly. Meanwhile, the dismemberment aspect guarantees a portion of the policy amount if the policyholder loses a primary bodily function – such as a limb, hearing, sight, or speech.
While AD&D insurance can be a standalone policy, life insurance experts advise against it being anyone’s primary life insurance coverage. Though inexpensive, its limitations make it less comprehensive than term or whole life insurance products. Instead, an accidental death and dismemberment insurance rider is a better, more cost-effective option to guarantee this coverage on top of a standard life insurance policy.
How much does an accidental death rider cost?
Riders typically don’t add a significant amount to the cost of your life insurance premiums. In general, most riders cost anywhere from seven to ten dollars per month (but the price varies). Just like with regular life insurance policies, the policyholder’s occupation, hobbies, and health condition can affect the rider’s price.
While an accidental death rider is a great rider to add to your primary insurance policy, it is still considered supplemental insurance with very strict limitations.
What does accidental death insurance cover?
So, what classifies as an accident? Car crashes and accidental drownings are obvious examples, while illnesses are a bit ambiguous. Insurance companies define accidental as any situation the victim has no control over. This includes a slip and fall, malfunctioning machinery, choking, or even murder.
On the other hand, death resulting from a natural disaster – hurricane, tornado, snowstorm – is considered accidental under certain circumstances. For example, if the policyholder died after voluntarily re-entering a hazardous environment, the accidental death claim will most likely be denied. Every accidental death and dismemberment insurance rider is different, so it’s important to understand the limitations of any policy before you purchase.
Exclusions to Accidental Death Riders
Insurance companies set unique exclusions for accidental death benefit riders, but many companies abide by four general restrictions.
Drug Use or Overdose
Deaths resulting from drug use are not accidental deaths. For example, insurance companies will not pay benefits for drug overdose or car accidents due to intoxication. However, a prescription medication that caused unintended consequences may qualify for a payout.
Illnesses: Cancer, Heart Attack, and Stroke
Insurance companies don’t try to sort through the cause of illness. They classify them as exclusions.
Skydiving and Bungee Jumping
Both activities require a waiver, which means participants understand the risks. As a result, insurance companies do not consider death from skydiving or bungee jumping an accident.
Warzone
Regardless of whether or not you are a combatant, your death in a warzone is not considered an accident.
How do you buy accidental death life insurance?
When shopping for accidental death life insurance, it’s important to understand that it is not an acceptable substitute for a life insurance policy. Instead, policyholders should add it to their existing whole or term life policies as a life insurance rider. With that said, the best way to buy an accidental death rider is to ensure your provider offers the rider with your current policy.
It can be challenging to navigate the process of acquiring an accidental death rider due to its strict nature. The fastest, most reliable way to ensure you get the coverage you need is to speak to an independent life insurance broker. One of Principled Life’s experienced life insurance advisors can help you find and purchase supplemental insurance with confidence. Give us a call today or request a quote online and rest easy knowing we’ll get you covered.
