Here at Quotacy, every carrier we work with offers term life insurance. This is complete coverage that protects families by replacing income. Every term life insurance policy we offer pays out in almost every situation, whether the death is a result of an accident or illness.
However, many companies offer what are sometimes referred to as “beginner” life insurance policies. These plans protect against only a few types of death but don’t require a lengthy application.
While it’s appealing to get coverage quickly, accidental death life insurance plans often don’t offer the complete protection that many families need. You can spot these plans by looking at what they cover. If they cover accidents, but not illnesses, you might be dealing with one of these plans.
This type of insurance is called Accidental Death Life Insurance. While it does cover your life in some very specific circumstances, if you die in any way that isn’t exactly specified in the policy, your beneficiaries may be left with nothing.
Because of this, while any protection you can give your family helps, it’s recommended that you don’t rely solely on accidental death life insurance if you’re eligible for a traditional life insurance policy.
This blog article will dive into the differences between accidental coverage and traditional life insurance to help you find the best coverage for your family.
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What’s Accidental Death Insurance?
Accidental death insurance pays benefits to your beneficiaries if your death is the result of an accident. This coverage is quick and easy to apply for. There are just a few questions, but no medical exam is required.
Because accidental death insurance only covers accidental death, the premiums are quite inexpensive.
A traditional life insurance policy pays out for almost any type of death. For example, both an accidental death policy and a traditional life insurance policy would pay out to your beneficiaries if you were to die in a car crash or by falling down a flight of stairs. However, if you have a heart attack, or lose a long battle with cancer, only a traditional life insurance policy would pay out.
Some accidental death life insurance policies do pay out a portion of the death benefit if the insured loses a body part or becomes paraplegic or quadriplegic. This feature is typically referred to as a Dismemberment and Paralysis Benefit.
John has a $250,000 accidental death insurance policy with a dismemberment and paralysis benefit worth 50% of his face amount.
One day while heading to work, John gets into a car crash and loses his sight in one eye due to a head injury.
His accidental death insurance policy will now pay out $125,000 (50% of his face amount/death benefit) to help him pay for medical expenses or simply to get back on his feet.
Each accidental death insurance policy can vary on their offerings, so be sure you know what the features are or aren’t before you buy one.
It’s also important to note that some life insurance companies offer optional riders that can add accidental death and dismemberment coverage onto a traditional term life policy.
This means that if you die due to an accident while covered under a traditional life insurance policy with an AD&D rider, your beneficiaries could receive up to twice your face amount. One payout equal to your face amount from the traditional life insurance coverage, and another payout from the AD&D rider.
John has a $500,000 term life insurance policy with a $250,000 accidental death benefit rider.
One day while heading to work, John gets into a car crash and dies as a result.
The life insurance company pays out a total of $750,000 to John’s beneficiary.
Common Policy Exclusions
Both accidental death and traditional life insurance policies have exceptions. It’s important to read the fine print and understand fully how you’re being protected when you decide to purchase coverage.
Accidental death policies typically carry exclusions for the following:
- Death while doing something illegal
- Death as a result of actions taken while under the influence of alcohol and drugs
- Death due to acts of war
- Death resulting from an illness (both mental and physical)
- Overdoses (although if a doctor accidentally prescribes or administers too much of a drug or medication which leads to injury or death, that may be covered)
- Death as a result of participating in risky activities including hobbies like flying, skydiving, or car racing
- Death by suicide
A term life insurance policy is much more inclusive, but still carries certain exceptions. For example:
- Death by suicide within the first two years
- Death while doing something illegal
- Death due to acts of war (these exclusions are much less common than they used to be, but are still in certain companies’ policies)
Requirements for Each Policy
Because an accidental death insurance policy covers fewer ways to die, the application process is much faster and less strict. They don’t cover deaths related to illness or health conditions, so these policies don’t require medical records or a medical exam. You could complete an application in just a few minutes. A Quotacy agent can help you do this quickly over the phone.
Traditional life insurance applications, on the other hand, need to take into account your medical history and health conditions, since the policy will also need to cover health-related deaths. This makes buying the life insurance a longer process, due to the fact that you may need an exam and your doctor may need to send in your medical records.
If you prefer to avoid a medical exam, yet still buy full life insurance coverage (not accidental coverage), you may be able to qualify for a no-exam life insurance policy. Many of the life insurance companies Quotacy works with offer these. These options use an accelerated underwriting process which speed up how quickly your coverage can be approved and eliminates medical exam requirements.
Receiving the Payout
Because traditional life insurance policies have such thorough applications and offer comprehensive coverage, they don’t often need to investigate the circumstances of the insured’s death. This means that the payout on your policy comes very quickly after the insured person dies.
With an accidental death insurance policy, carriers will only cover deaths related to accidents, so they need you to prove that the death was truly accidental in nature in order to receive your payout. This can also mean that carriers can contest your payout if the circumstances around the death are ambiguous or not covered by the policy’s terms and conditions.
The Bottom Line
Traditional life insurance policies and accidental death coverage are wildly different types of coverage with very different situations in which you’d want to invest in coverage.
Accidental death coverage might be a good choice if:
- Your job carries a high risk of an accident (like if you’re a trucker or a construction worker, for example).
- You aren’t healthy enough to be accepted for a traditional life insurance policy, but still want to offer your family some coverage.
- You’d like to protect yourself with compensation in the event of accident-related dismemberment.
Accidents are the third leading cause of death in the United States. Therefore, an accidental death insurance policy can add peace of mind.
However, according to most advisors, term life insurance coverage is typically your best option if you’d like to protect your family. It’s wise to protect your family with term life coverage if you’d like simple, guaranteed coverage for your family in the event of your death.
Here at Quotacy, we can help you find a term life insurance policy that fits your needs, and even suggest an accidental death and dismemberment rider if you’d like to add accident coverage.
If you’re not eligible for a traditional life insurance policy, your Quotacy agent can help you purchase an accidental death life insurance policy. But we recommend you try applying for a traditional policy first since it provides better coverage.
You can run a quick, free, and anonymous term life insurance quotes here. See quotes instantly and in real-time without giving away any contact information. You may be surprised at how little term life insurance could cost.
About the writer
Natasha Cornelius, CLU
Senior Editor and Licensed Life Insurance Expert
Natasha Cornelius, CLU, is a writer, editor, and life insurance researcher for Quotacy.com where her goal is to make life insurance more transparent and easier to understand. She has been in the life insurance industry since 2010 and has been writing about life insurance since 2014. Natasha earned her Chartered Life Underwriter designation in 2022. She is also co-host of Quotacy’s YouTube series. Connect with her on LinkedIn.