Does Life Insurance Cover Accidents?

Each year more than 40 million Americans are injured in accidents. Many accidents result in death or permanent disability. There are exclusions in life insurance policies which means there are no guarantees the beneficiaries will receive a payment. Accident insurance can add a degree of security on top of your life insurance to guarantee you’ll be compensated even if you survive and suffer serious injuries. 

So, does life insurance cover accidents? Yes and no, life insurance covers accidents only if accident policies are mentioned in your life insurance policy. If your life insurance doesn’t cover accidents, you can purchase coverage as an add-on policy. The standard life insurance policy compensates beneficiaries for a natural death. Accident-related death caused by traffic accidents or sports accidents is only covered if this clause is mentioned in the policy. Consult your insurance provider to add accident coverage to your life insurance policy.

Accident insurance can be purchased independently or added to your life insurance policy. This guide will focus on accidents and life insurance policies, how they bundle together, and how to get the coverage you need for all unfortunate situations.

Life Insurance: What It Covers

Most life insurance policies are designed to protect your loved ones if you pass away. The premiums on a life insurance policy are paid on a monthly basis and then the death benefit is passed on to beneficiaries (spouse, children, parents, etc). You can choose from ‘term life insurance’ which insures you for a specific period, or you can purchase ‘whole life insurance’ which lasts until the day you die.

Life insurance will only compensate the beneficiaries if you pass from a natural cause such as old age, illness, heart attack, etc. If you pass due to a traffic accident or dangerous sports such as skydiving, your beneficiaries might not receive the death benefit. The insurance company may also refuse to pay out on a death benefit if you are murdered or commit suicide – there are many nuances that apply to life insurance claims.

What Is AD&D (Accidental Death And Dismemberment)?

AD&D insurance is an insurance policy that provides coverage for accidents. The accidents you’re protected from are all non-natural accidents such as traffic accidents, violence, sports accidents, and more. This means you have an extra layer of security as opposed to life insurance that only insures you from natural causes. AD&D insurance also pays out if you survive an accident and you lose vital body parts such as your limbs or internal organs. AD&D will also cover you for gunshot wounds, disabilities, brain injuries, concussions, fractures, or body part dismemberment. Each one of these accidents has a certain payout amount allocated to it, and the full payout only comes if you are killed in an accident.

The insurance provider can add an AD&D policy on top of your life insurance policy and explain the amounts you’re entailed to for each injury. Accident insurance will cover virtually all possible accidents and give you maximum protection for you and your loved ones. AD&D insurance provides the ultimate financial protection plan for your family because it gives the family peace of mind. AD&D can be used in conjunction with disability insurance and life insurance.

How Are AD&D And Life Insurance Different?

There are certain gaps in a life insurance policy that will be covered by AD&D insurance. In fact, you can take out an AD&D insurance policy if you are a young and healthy individual who is not at risk of a natural death yet. Most AD&D policies are offered as an add-on to life insurance policies. Life insurance provides basic coverage that pays out a certain death benefit as long as you die in a stated coverage period. There are many exceptions to life insurance such as dying from a DUI or criminal activity.

AD&D policies add high-level protection against all possible accidents. They pay regardless of whether you die or survive an accident. If you survive an accident with a permanent impairment, AD&D insurance will still cover you for the damages on top of your disability insurance. Meanwhile, life insurance does not cover you if you survive an accident. While AD&D is not a replacement for life insurance, it is an excellent supplemental policy that can add valuable coverage. AD&D is quite affordable and can be added to your current life insurance policy.

Is AD&D Insurance Mandatory with Life Insurance?

No, AD&D insurance coverage is not mandatory, but many insurance brokers will try to bundle it as an additional insurance cover related for accidents and dismemberment. These policies are attractive to young people who are not likely to die from natural causes but they are more prone to accidents as they commute to work often and partake in numerous outdoor activities.

Despite that, you must remember that AD&D policies are not an equal subtitle for life insurance. Life insurance is about the long-term future planning. When you’re 35 years old, you won’t need a $1M life insurance policy but you can lock in a certain price for the policy early. Life insurance gets more expensive as you get older which is why it’s wise to invest in a policy 20-30 years before you start needing life insurance to cover your dependents.

The opposite holds true – if you use AD&D insurance for the next 30 years and it’s time to purchase a life insurance policy, you’re going to end up paying a lot more for the policy. The bottom line is that to be fully covered you need both life insurance and AD&D policies, and it’s wiser to start investing in these policies early on to be financially secure for all possible accidents.

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