5 Reasons Accidental Death Insurance Might Be Right for You

“Accidents happen” is my mantra when I’m wiping a spill or helping my kids try, try again. Fortunately, math mistakes and overturned oatmeal are easy fixes. More serious accidents need a bigger plan.

Accidental death insurance and accidental death and dismemberment policies both provide coverage for some unforeseen scenarios. (Here’s how AD vs. AD&D compare.) These policies are often used in addition to a traditional term life policy, but not always. The coverage they offer may be more limited than a traditional policy, but in some cases, they may be a helpful form of insurance to consider.

What Is Accidental Death Insurance?

A traditional term life insurance policy covers death due to almost any cause (although most policies have a two-year contestability period and suicide provision). Accidental death insurance covers death specifically due to accidents, as laid out in the policy. It has a more limited scope and won’t cover deaths from natural causes or illness.

Accidental death policies may cover you if you pass away due to circumstances such as:

• Car accident

• Fire

• Falls

• Choking

• Drowning

• Firearm-related accident

• Machinery accident

• Exposure to the elements

The policy details would specify which types of situations are covered under that particular policy.

What Is Accidental Death and Dismemberment Insurance?

The important difference is that AD&D offers benefits if you sustain certain serious injuries even if you don’t ultimately pass away.

Details vary by policy, but generally you can expect to be eligible to claim a portion of the policy amount if you lose a limb, lose function (e.g., sight, hearing) in at least one body part, or have partial or permanent paralysis due to an accident. Some policies will pay 50-100 percent of the benefit based on the severity of injury, such as loss of hearing in one ear versus a combination of injuries.

A policy may also specify time limits for how soon after an accident you need to pass away or sustain an injury to make a claim. That is, if you hurt your back in a car accident and end up needing a wheelchair years down the line, the insurer may not recognize that injury as accident-related paralysis.

5 Reasons People Get AD or AD&D Coverage

There are a few reasons why these policies can be attractive:

1. Accidental death policies may offer lower premiums than term life insurance policies because they cover a narrower set of situations. Premiums vary, but you may be able to find accidental death coverage for less than $10 a month.

2. Accidental death policies are a form of guaranteed issue insurance. In other words, approval is based on age only (insurers may cap the eligible age to apply at 70 or 80 years old). You don’t need to take a medical exam, so this insurance may be an option for people who don’t qualify for traditional term policies due to health issues.

3. AD&D has the advantage of paying a benefit for qualifying injuries as well as for death. Loss of a limb or injuries to your sight or hearing could leave you unable to continue your usual job. This coverage could offer a financial benefit while you figure out your next steps.

4. It may be convenient to add an AD&D policy as a rider to an existing term policy. Many term life policies offer various riders that can provide additional features or coverage. If you are in the process of getting term life insurance, you may be able to add AD or AD&D coverage to the same policy.

5. One major benefit of an AD&D rider is that you could get “double indemnity,” meaning your beneficiary could receive two times the face value of your policy if you pass away due to a covered accident.

Why It Can Be Helpful to Consider a Term Life Insurance Policy

Getting covered in case of an unforeseen accident is a smart way to look out for your loved ones. But it’s important to consider how far your coverage extends.

The biggest disadvantage of accidental death policies is how limited their coverage is. Accidental death and AD&D policies generally won’t cover accidents due to high-risk hobbies or careers, wartime injuries (which can include death due to a terrorist attack), or accidents that happen while you’re under the effects of non-prescription drugs or alcohol.

Essentially, if you are knowingly taking a risk, whether that’s javelin-throwing or drinking and driving, then a resulting accident isn’t out of your control in the way a piano falling from the sky would be. And if it’s within your control, the insurer likely won’t cover it.

A term life policy generally covers any circumstances an accidental death policy would, in addition to many other causes of death, including natural causes and medical conditions. You may be able to get much broader coverage by choosing a term policy.

Similarly, if you’re worried about a debilitating injury, you might decide that a broader disability policy covers you more fully for injury than AD&D.

Unintentional injuries are one of the leading causes of death, so it can be worthwhile to consider having coverage in case of an accident. That said, other leading causes of death in the United States, such as heart disease or cancer, may be even more prevalent—and AD or AD&D would not cover death due to sickness.

If you can get an inexpensive accidental death or AD&D policy in addition to a traditional policy, the extra death benefit may be helpful to your loved ones in a difficult time. These policies can also be a good way to get some coverage if your health makes medical underwriting a no-go.

The right policy fit for you can depend on your risk tolerance, what policies you qualify for and your finances, among other factors. Accidental death insurance provides a limited scope of coverage, but it can be a convenient and inexpensive way to cover specific situations.

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