Doesn’t My Life Insurance Plan Cover Accidental Death?

Your health insurance or life insurance company may have offered you accidental death and dismemberment (AD&D) coverage at some point. At first, the policy seems like a good idea—why wouldn’t you want your family compensated if you were killed in an accident? However, the truth is that virtually all life insurance policies already cover the accidental death of the insured, so accidental death insurance is only supplementary and possibly unnecessary coverage. Read on for a more detailed discussion of the coverage limits of accidental death insurance and how it differs from basic life insurance.

Accidental Death Insurance vs. Life Insurance

Both accidental death insurance and life insurance policies will most likely pay out benefits if the policyholder is killed in an accident. The policies also tend to pay proceeds in a lump-sum form after the death of the insured. The main difference between the two is that accidental death only provides coverage in specific situations that are also highly unlikely. Moreover, the death of the insured usually must occur within a certain timeframe after the accident in order to qualify for coverage. With life insurance, on the other hand, accidental death is covered under almost all circumstances. Typically, life insurance will also have a much larger death benefit compared to accidental death coverage. Life insurance is broader in its scope because it covers the more likely event of death from natural causes, such as heart attack or cancer, in addition to accidental deaths.

Purpose of Accidental Death Coverage

The purpose of accidental death coverage is twofold. First, accidental death insurance can supplement a basic life insurance policy for those who are at exceptional risk for this manner of death. Usually, those most vulnerable to accidental death are people under age 40. If you are young and feel that your existing life insurance policy is inadequate, you may choose to augment your coverage with a separate accidental death policy.

Secondly, accidental death almost always comes packaged with dismemberment insurance, which covers mishaps that your basic life policy will not. You may not be particularly concerned about dying in an accident, but you may chose to purchase AD&D insurance to protect your loved ones in the event you became seriously disabled. For instance, if you lost both your legs in a car accident, your life insurance policy would not provide you with any benefits if you survived the accident. By contrast, your AD&D policy would most likely award you and your beneficiaries at least the majority of your policy’s face value. These benefits would help replace the lost income your household suffers as a result of your dismemberment.