What is the purpose of accidental death insurance?

It’s a life insurance policy that provides financial protection specifically when cause of death or loss of life is the result of an accident.

For the past 30 years, the U.S. Centers for Disease Control and Prevention has been collecting and analyzing causes of death in the United States.  It comes as little surprise that heart disease and cancer are the top two causes, but many people would be surprised to learn that among all causes of death, accidents rank fourth on the list.

Almost 150,000 people die from accidents each year according to recent CDC statistics. Accidents also produce more than 28 million emergency room visits annually.  Some of these are for relatively minor issues, but in other cases, a visit can be to treat a traumatic and life-threatening situation.

If you are in one of the categories of higher risk for an accidental death or a traumatic injury, there is a solution that will give you an added layer of protection for you and your family with out requiring a medical exam: Accidental Death and Dismemberment Insurance (AD&D insurance).

Ad&d policy and traditional life are both great insurance products when used correctly.

What is Accidental Death Insurance?

Accidental death insurance pays your beneficiaries if you are killed in a covered accident. It’s another type of burial insurance.

An “accidental death” means a death caused by an unforeseen circumstance unrelated to the body. This means the death cannot be caused by illness or the insured’s physical condition.

For example, if you buy a policy with an accidental death benefit amount of $100,000 and you die as a result of the one of types of accidents listed in the policy, your beneficiaries would receive the full face amount.

What is accidental death and dismemberment?

Commonly called ad&d insurance, accidental death insurance can also cover if you are injured and suffer a loss, but do not die. In most cases, dismemberment insurance pays a percentage of the face amount of your policy.

The percentage is based on the seriousness of the injury. Examples of an ad&d insurance covered accident.

• If you lose a thumb and fingers on the same hand, you might collect 25 percent of your amount of coverage.
• If you lose a hand, a foot, or sight in one of your eyes, you might receive 50 percent of the face value of your policy.
• For injuries with multiple losses, such as losing a hand, a foot and the loss of sight in both eyes, you could be compensated a full 100% amount of coverage from your policy.

As you can see, there are many variables when it comes to ad&d insurance.

In addition, as part of the payout, some policies will cover funeral costs or unsuccessful medical treatments prior to death.  Other policies also provide for income payments, making it possible for your loved ones to remain on stable financial footing after you pass away.

What is considered an accidental death?

To collect a payout on an accidental death insurance policy, your death or injury must be due to one of the qualifying events listed in your policy.  Some examples of what would qualify as an accidental death event include:

• Motor vehicle accident
• Pedestrian or bike rider hit by a car
• Boating accident
• Poisoning
• Accidental drug overdose
• Drowning
• Choking
• Fall
• Work related accidents
• Fire
• Accidental gunshots
• Victim of violent crime

In terms of trends, it should be noted that among the various kinds of accidental deaths, people age 25 and younger are the mostly likely to die in car accidents.  People who are 65 and older face a much higher incidence of falls in their homes, which can be deadly.  The CDC has also seen a rise in accidental poisonings from prescription drug abuse in people of all ages.

What isn’t considered an  accidental death?

Insurance companies will tell you that anything other than a defined exclusion can be considered an accidental death.

People often times get confused about what qualifies, and this can lead to arguments and occasionally litigation during a difficult time. That’s why it is best to do your homework up front and make sure you completely understand the details of your policy before you purchase.

Those who don’t do their homework may be quick to assume that when someone dies unexpectedly that it should be considered an accidental death, regardless of the circumstances.

Unfortunately, an insurance company will not look at things that way.

Before they will pay out on an accidental death insurance policy, they will need to know the specific cause of death, or the specific cause of the traumatic injuries leading to the filing of, for example, a dismemberment claim.

In instances of a death, the cause will be stated on a certified death certificate which will provide proof that not only did a person pass away, but also how they passed away.

Many people get confused between passing away from an illness and passing away from an accident.

For example, if you die from lung disease, this is considered an illness, and as such, it will not be covered under an accidental death insurance. However, if you die from an auto accident, and it is clearly stated on the death certificate, then you should have no trouble collecting a payout from your carrier.

If someone suffers a stroke or heart attack while driving and those took place before the accident, and the accident resulted from that bodily malfunction, the policy would not payout as the accident was not the cause of death.

Similarly, if an insured involved in an auto accident died from an infection contracted in the hospital, the policy would not pay.

Does Accidental Death Insurance Cover Accidental Deaths While Traveling?

Yes.

There are two instances when this is the case.

In addition to other accident scenarios, accidental death insurance policies cover death when traveling when a person is a commercial passenger on a plane, bus, taxi, ferry, train or any other form of public transportation.  At other times, a policy will be issued that covers only the period when a person is a passenger on any of these forms of transportation.  This is known as common carrier accidental death insurance.

It is possible to purchase a common carrier accident insurance policy or a 24-hour accidental death insurance policy that can pay you as much as $1 million when you die or lose a limb and your eyesight in a common carrier accident.

If you ever need to file an accidental death claim on an accidental death insurance policy, make sure that the insurer knows that it was a common carrier accident because additional benefits, as much as double in some cases, are paid out under these circumstances.

Other Special Travel Situations

It’s no secret that there is global unrest in the world, and frequent international travelers might want to consider purchasing a policy that covers accidental death and dismemberment coverage for an act of terrorism.  Optional high-risk destination coverage and optional war zone destination coverage is also available.  In most cases, it is available to anyone traveling outside their permanent home country.

For infrequent travelers who are going to high risk areas or war zones, single round-trip coverage is also available with coverage up to $1 million, including acts of terrorism on a common carrier.

Currently, some countries are considered a much higher risk to travel to than others, earning them a War Risk Area 1 designation.  Those countries are Iraq, Afghanistan, Pakistan, Israel (West Bank & Gaza Strip), Iran, Somalia, Chechnya, North Korea, Palestinian Territories, and Yemen.

High limit travel accident insurance is also available and can provide payout benefit amounts from $100,000 to $20 million.  It has many options, including single-trip or annual coverage, full 24-hour coverage, all common carrier coverage, or flight accidents only.

Kidnapping and extortion are very real and growing threats across the globe.  Many companies have high profile executives or have significant business interests in regions that are beset by lawlessness and high degrees of danger.  Other companies handle large sums of cash or work with sensitive information, also making them vulnerable targets for criminals.  Kidnap, ransom and extortion insurance protects against financial loss and provides services to assist policy holders by making crisis management and security consultants available to manage incidents.

Many companies purchase common carrier accident insurance plans for their employees and include it as part of their employee benefits package. Life insurance agents may also recognize this type of plan as an inexpensive way to enhance a client’s insurance portfolio.

Accidental Death vs. Term Life Insurance

There is some overlap with accidental death insurance and a traditional life insurance policy, but it should not be considered as a replacement.  You should view accidental death insurance as a supplement to your life insurance policy and disability insurance because it is generally considered as having a very narrow scope of coverage.

Think of it in these terms: If you pass away and your family lost your income, your life insurance policy will cover you in most all instances whether it is due to an accident or natural causes.

With accidental death insurance, your family would only receive a payout if you died due to an accident.  Premiums for AD&D are generally very low because the scope is so narrow, so this makes for a nice added form of coverage.

In addition to these two forms of insurance, you should also consider adding disability insurance to cover long-term issues that might come up that are not due to accidents.

How Much Accidental Death Insurance Do I Need?

As a rule of thumb, you should buy the same amount of accidental death insurance coverage as you have in life insurance coverage.  For example, if you have $100,000 in life insurance coverage, you should also purchase $100,000 in AD&D coverage.  The reason for this is that your life insurance coverage was determined based on the needs of the surviving family members.  So, whether you die of natural causes or from an accident, your family’s needs are the same.

We often see clients who underestimate the amount of life insurance they need, so we encourage clients to work with their agent to determine in detail what their family will need after their passing.

How much accidental death insurance you need will sometimes depend on whether your employer offers accidental death insurance as a company benefit.  In many cases, it is, with very affordable group premiums.  This is especially important for those people who are engaged in dangerous types of work where incidences of serious injuries are higher than the norm.  This includes occupations such as heavy equipment operators, construction workers, and commercial fishermen, among others.  It also makes sense to buy accidental death insurance for those who want bare bones coverage or who cannot afford regular insurance.

What is the best accidental death insurance?

The best accidental death insurance is the kind that is inforce when you and your family need it.

There are many great companies that offer accidental death insurance, it’s important you put a policy inforce so it’s there when you’re family needs it.

Getting Accidental Death Insurance

There are several highly-rated insurance companies that offer these policies.

Top Accidental Death Insurance Companies

• Mutual of Omaha
• United Home Life
• Globe Life
• Aflac
• Fidelity
• Farmers
• and many other life insurance companies.

Accidental Death Pros and Cons

Pros

• Low premium costs or may be provided free of charge as part of an employee benefit package.
• Provides added coverage for people who work in high risk jobs.
• Costs much less than term life insurance.
• Particularly appealing for younger workers who are statistically more likely to die from an accident than an illness.
• You do not need to die to collect some or all of the face value of the policy.
• Works well when purchased in addition to term life insurance and disability insurance.
• A low-cost way to ease financial stress following certain kinds of death or dismemberment events.
• A viable alternative when you cannot afford other insurance options.
• Can purchase a travel rider only.

Cons

• Limited in scope for what it covers.
• You must die from an accident, not an illness.
• Does not cover many forms of death, including surgery, infections, drug overdoses.
• Excludes some high-risk activities.
• Rates may increase for those who are at the most risk for accidents, like the young and seniors.

How Do I Get Accidental Death Insurance?

Enrollment can happen three ways:

1. Working with a licensed insurance agent
2. Enrollment through your employer if they offer voluntary employee benefits
3. Sometimes your bank or credit union will offer a policy you can purchase.

Because there are many variables when it comes to accidental death policies, your best bet is to contact an insurance agent and discuss your unique needs and situation with them.  Together you can come up with the policy amount and specific types of accidental death coverage that best meets your situation.