The Basics of Accidental Life Insurance

In this article...
  • Explore the features and benefits of accidental life insurance. Learn how accidental death coverage works and when it pays a death benefit to your loved ones.

Every year, 173,040 Americans die from unintentional injuries, making accidents the third leading cause of death in the United States, according to the U.S. Centers for Disease Control and Prevention (CDC). No one ever intends to become the victim of a fatal auto collision, a fall or another accident, but you can plan to ensure that your loved ones have financial protection if the worst should happen. Accidental death life insurance is one way to provide money for your family members if you die due to an unintentional injury. Learning what accidental death life insurance is and how it works can help you decide if it's the best option for your needs.

What Is Accidental Death Life Insurance?

Accidental death life insurance pays a death benefit if your cause of death fits the definition of an accident established by the insurance company. If your death is due to natural causes like an illness or disease, the insurer won't issue a payout. Most accidental life lasts for a set number of years and then expires. In exchange for the promise of the death benefit payout, you pay a monthly premium to the insurance company.

What Is Considered Accidental Death for Insurance?

Each insurance company establishes its own guidelines for what qualifies as an accidental death. Generally, the following causes of death are deemed accidental.

  • Car and traffic accidents
  • Falls
  • Workplace accidents
  • Medical malpractice and errors
  • Fire
  • Drowning
  • Firearms accidents
  • Unintentional poisonings

Some policies cover homicides, provided that the beneficiary of a policy isn't convicted of the crime. Normally, suicide and illicit drug overdoses are not covered by accidental death insurance. Insurance companies are also unlikely to pay claims if it's determined that illegal drugs or alcohol were involved in the accident or if the insured was committing a crime when the accident occurred.

Can You Cash in Accidental Life Insurance?

No, accidental life insurance doesn't usually have a cash value. For the first few days of an accidental death life insurance policy, you can cancel the coverage and get your money back. This timeframe is known as the free look period. Once the period ends, you won't receive any money back if you cancel.

Benefits of Accidental Life Insurance

Accidental life insurance has a few key benefits.

No Medical Exam

Because the insurance company won't have to pay if you die due to natural causes, medical exams usually aren't necessary to receive approval for accidental death life insurance.

Availability

People considered uninsurable for traditional term life may still be able to obtain an accidental life policy. An insurance company may deem you uninsurable due to:

  • Health problems, such as a critical illness
  • Risky recreational activities
  • Risky professions like construction workers or pilots

Speed

Because the underwriting process is simple, you can usually obtain approval for accidental death insurance quickly. You may not be able to wait for coverage if you're planning a trip or have been assigned new risky job duties.

Cost

Premium payments are often less expensive than traditional term life insurance. The amount you pay is usually determined by your age and how likely you are to suffer an accident. If you work in a risky field, you'll likely pay more than someone who does not.

Drawbacks of Accidental Life Insurance

Accidental life insurance does have some drawbacks that you need to be aware of before you buy a policy.

Age Restrictions

Normally, accidental death life insurance is only available to younger people. Older adults may not qualify.

Limited Death Benefit Size

Insurance companies place caps on the amount of accidental death insurance you can buy. You may not be able to purchase enough insurance to fully provide for your family.

Fewer Choices

Most insurers offer only one accidental death insurance plan with a set number of available death benefit options. As a result, you may have to settle for a policy that doesn't protect you for long enough. You also have less of an ability to shop around to find the best deal due to the limited choice.

Likelihood of Use

Overall, your chances of dying due to an accident are likely low. About 12 out of every 100,000 people die from falls and motor vehicle deaths, according to the CDC. Because you're more likely to die from natural causes, a traditional term life policy may be a better option if you qualify for one.

Is Accidental Death Insurance the Same as an ADB Rider?

No, although accidental death life insurance and an accidental death benefit (ADB) rider both provide a payout if you die due to an accident, they are not the same. Accidental death insurance is a standalone policy that only pays a death benefit for accident-related deaths.

An ADB rider is an add-on to an existing life insurance policy. If you die due to natural causes, the insurance pays the face value of the policy. For accidental deaths, the policy pays the face value plus an additional lump sum. The rider gives your loved ones extra money to cover unexpected costs associated with your sudden death.

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