What is Accidental Death Insurance?
Accidental death insurance is a type of coverage that pays out a sum of money to the insured’s beneficiaries if the insured dies from an accidental cause. It’s a supplement to (not a replacement for) life insurance.
Accidental death insurance vs. life insurance
Accidental death insurance and life insurance function similarly in that they both pay out a specific sum of money to the policyholder’s beneficiaries when the insured dies.
The difference is that life insurance covers virtually all causes of death (with a suicide clause exception that usually expires after a couple of years), while accidental death insurance only covers very specific instances. If someone buys accidental death insurance and dies from a cause other than one the insurer deems accidental, their beneficiaries don’t receive anything.
Specifically, most accidental death policies will pay out in the event of:
Drowning
Falls
Poisoning
Exposure to the elements
Traffic accidents
Industrial accidents
Murder
They usually won’t, however, pay out if the cause of death was medical. That’s true even if the death was sudden and unexpected, like in the case of a heart attack or aneurysm.
Because life insurance is further reaching, many insurance professionals view accidental death coverage as a supplement to life insurance, not a replacement for it.
To make it easier to get both coverage types, many life insurance providers offer accidental death riders that can be added to life insurance policies.
Accidental death and dismemberment insurance
Accidental death insurance pays out only when the insured dies. This differs from accidental death and dismemberment (AD&D) insurance, which pays out a portion of the policy benefit if the insured loses a limb or some serious measure of bodily function, like their ability to hear or see.
Like accidental death insurance, AD&D insurance is available as a standalone policy or as a rider on a life insurance policy.