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Accidental Death Life Insurance

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Mutual of Omaha life insurance
Author: Brian Greenberg CEO of True Blue Life Insurance
Last updated December 23, 2020

Accidental Death & Dismemberment: The Most Affordable Life Insurance on the Market

Did you know that you can get a life insurance policy for less than what you pay for Netflix or an Amazon Prime membership every month? Accidental death insurance is one of the least expensive life insurance options on the market. It gives you protection and high-dollar payout for death or permanent disabilities that result from non-health-related causes. Perfect for everyone, AD&D insurance gives peace of mind when you need it the most.

What Is Considered Accidental Death?

According to the Centers for Disease Control and Prevention, accidents account for over 130,000 deaths each year in the United States. They are the fourth leading cause of death in the U.S. today. That’s a shocking number of fatalities occurring because of accidents.

Accidents come in all shapes and sizes, but it’s typically defined as a sudden event that is not planned or intended, causing injury or death. It’s an unforeseen and sudden physical situation you can’t control. Death from accidents involving motor vehicles, machinery, unintentional poisoning, slip and falls, suffocation, choking, drowning and more are usually covered by accidental death benefit insurance. Therefore, if you’re in a car, bus or airplane crash; or if you are hit by a car while crossing the street or you fall off a ladder while trying to fix your roof and you die as a result—these are considered accidental deaths that would be covered.

Additionally, accidental death benefit insurance may also cover dismemberment—the partial or total loss of a limb or limbs—as well as calamities like paralysis, hearing loss, burns that cover more than 20 percent of your body, etc. A licensed True Blue Life Insurance agent can let you know what your specific policy covers.

Who Needs Accidental Death and Dismemberment Insurance?

Because accidents can happen anytime, this type of coverage works for just about every person from every walk of life.

Ages 18-25: When it comes to the probability of death, young adults are more at risk for death by accident than by natural causes. Although people in this age group are less likely than older adults to have dependents, the death of a young adult can still have a significant financial impact. An accidental death policy is an inexpensive life insurance option for covering potential medical bills and final expenses resulting from an end-of-life situation.

Ages 25-35: Many people in this age group are beginning careers and starting families. An AD&D policy provides an extra level of protection. It also ensures the financial certainty of any dependents, all at an affordable rate. Many employers offer this type of coverage as part of their overall benefits package. But, it’s important to realize that an AD&D policy obtained through the workplace ends when employment there ends. So, it can be smart to invest in separate AD&D coverage that’s not part of a job-related benefits package.

Ages 35-55: Accidental death coverage provides a great add-on to an overall financial plan for people in this age group. That’s especially true for those who travel frequently. Although death while traveling may be a rare event, it does happen. Investing an extra couple of dollars a month to cover the increased costs related to an accidental death may make sense.

These types of policies work well for everyone — even those who already own a life insurance policy.

What Does “Accidental Death and Dismemberment” Mean?

This type of coverage is the most straightforward of all life insurance policies. As a limited life insurance policy, AD&D insurance will cover your death if it’s solely the result of an accident. An AD&D policy will also pay out various amounts of the benefit if you obtain an accident-based disability that causes loss of limb, eyesight, or ability to move. Some life insurance companies will also double the amount of coverage if the accidental death occurs on a commercial carrier, such as an airline or a train.

How Much Does Accidental Death & Dismemberment Insurance Cost?

When it comes to inexpensive life insurance, this type of coverage is the way to go if you’re looking for the most cost-effective protection. Since accidental death insurance covers the limited risk of death resulting from an accident and eliminates the need for health questions or exams, AD&D coverage remains one of the best options for those who want to be covered at the lowest possible cost.

What Is an Accidental Death Benefit Rider?

Standard life insurance policies have add-ons, or extra coverage, attached to the life insurance contract. These are called “riders,” and there can be an additional cost for the coverage they provide. Many term life insurance policies have an “Accidental Death” rider, which increases the overall death benefit of the policy if the death results from an accident. Depending on the company, it may make sense to purchase a term life insurance policy and add this rider for extra coverage. However, there are situations where having a separate, stand-alone AD&D policy might be cheaper and a better option.

What Constitutes Accidental Death?

According to the Centers for Disease Control and Prevention, in 2015, more than 140,000 deaths in the United States were categorized as “accidental.” In the simplest terms, any death that is not from natural causes (which includes disease), will usually fall into this category. Car accidents, accidental discharge of a firearm, and even murder are considered accidental deaths. That makes these situations insurable under an AD&D policy. It’s important to note that suicide is not covered.

https://www.cdc.gov/nchs/fastats/accidental-injury.htm

What Is an Accidental Death Benefit?

The accidental death benefit is the payout from an AD&D policy to the beneficiary if the death of the insured was accidental in nature. In traditional life insurance policies, the payout is referred to as the “death benefit.”

Are Accidental Death and Dismemberment Benefits Taxable?

Benefits (the payout from the policy) are treated the same as any life insurance policy payout, and are not normally taxed as income. The only difference between an accidental death policy and a standard life insurance policy is the nature of the insured’s death.

Does Accidental Death Cover Cancer?

No. These policies only cover a death that results from an accident. Since cancer is a disease, death resulting from cancer would not be covered by an accidental death policy.

The insurance company that is liable for the payment of an accidental death benefit will conduct a thorough investigation into the cause of death before paying the claim. Obviously, there are exclusions when it comes to deaths—those instances when a death is not an accident. That’s why a thorough investigation takes place. The exclusions vary by state, but here are a few:

  • An intentionally self-inflicted injury, suicide, or any attempt at suicide.
  • If blood alcohol content is .08 percent or higher.
  • If the insured is taking a narcotic—or any drug or medication for that matter unless it’s prescribed by a physician.
  • Engaging in any illegal activity.
  • Service in the armed forces or injuries sustained in war.
  • Participation in hazardous hobbies like skydiving, etc.

Most people can use common sense to guess what the exclusions would be, but a conversation with a licensed True Blue agent will remove any doubt.

Are Accidental Death Policies Worth It?

Many people ask if these policies are worth the expense. Given the risk of dying in an accident versus the extremely low cost of an accidental death policy, paying a little more for extra coverage may not be a bad idea. For example, a 42-year-old man in Georgia could get a $50,000 AD&D policy for about $60 per year. Even if he kept the policy in force for 40 years, his overall cost for this protection would only be about $2,400. This type of policy can have a very attractive return on investment, especially when compared with traditional life insurance policies.

Can Life Insurance Cover Accidental Death?

Yes. Your everyday life insurance policy will cover both accidental death AND death by disease or other natural causes. Accidental death insurance gives additional payouts if a death results from an accident. Many people choose to add accidental death coverage to their existing life insurance policy in the form of a rider. Others choose to have an AD&D policy that’s separate from their life insurance coverage.

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