Accidental death insurance policy

Should I buy an accidental death & dismemberment insurance policy instead of standard life insurance?

An accidental death & dismemberment insurance policy is not the same as standard life insurance. In fact, there are specific key differences between accidental death insurance and life insurance. Here's what you need to know.

What is accidental death insurance? 

Accidental death insurance, sometimes known as accidental death and dismemberment, is a type of insurance that pays a benefit if the insured dies in an accident or is severely injured such as with loss of use of body parts. This type of policy is generally less expensive than other types of life insurance, but it only pays if these events occur.

Accidental death policies or riders on conventional life insurance policies may be beneficial for younger individuals who want to provide a financial safety net in case of a completely unexpected death. 

Buying an accidental death insurance policy

If you're concerned about accidental death, work in a potentially hazardous occupation, or engage in risky hobbies or sports, an AD&D policy might be one way to insure against an unexpected loss.  

Your employer may offer coverage as part of your benefits package. And, as mentioned previously, coverage may also be added onto a standard life insurance policy in the form of a rider. Therefore, if you were to if you die in a covered accident, your life insurance policy would pay extra in addition to your policy’s death benefit.

Keep in mind that while an accidental death insurance policy can be very affordable, it’s very limited and doesn’t provide the broad protection of a conventional life insurance policy. For these reasons, this type of policy is often used as a supplemental benefit and not as stand-alone life insurance coverage.  

What is standard life insurance? 

Other types of life insurance pay a benefit to the beneficiaries upon the insured individual’s death. However, typically term and permanent life insurance policies cost more because they cover more causes of death. Accidental death is paid if the death is accidental and qualifies in the list of causes of death outlined in the policy.

Key differences between accidental death insurance and standard life insurance

Accidental death insurance can be found as a single policy, but it's more commonly packaged together as a rider on a standard life insurance policy. Much like a standard life insurance policy, an accidental death policy pays a death benefit to your beneficiaries, but as the name suggests, only provides coverage in the event you die due to a covered accident.

The dismemberment part comes in if you were to lose a limb(s) as a result of an accident. In this case, an AD&D policy generally will pay out a predetermined amount as specified in your policy.* Simply put, accidental death insurance is a very specific as to what it will and will not cover. With life insurance, you'll have coverage for incidences of death as outlined in your specific contract - accidents included.**

It may be a good idea to speak with a financial professional about your options to decide if accidental death insurance is right for you based on the larger context of your financial goals and other available coverage. 

*Some AD&D policies include coverage for a complete or partial loss of vision, hearing, and speech as a result of an accident.
**Life insurance policies typically pay for most causes of death, exceptions will be specified in your contract. Policies will vary.

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