Accidental Death Insurance – What is it and How Does it Fit Your Insurance Planning Strategy?
My role at Ellenbecker Investment Group is to help you determine what life, disability and long-term care insurance makes sense for you, your family and your overall financial plan. Today I want to provide some insight on Accidental Death Insurance so you know if it could add value to your risk management plan.
I don’t want to bury the lead, so you should know that an Accidental Death Benefit policy would not pay out a benefit for 94% of all deaths in the United States. According to the Center for Disease Control National Vital Statistics Report from June 24, 2019, accidents are the third leading cause of death in the U.S., behind heart disease and cancer. They account for 6% of all deaths.
Accidental Death Insurance generally covers loss of life resulting from accidents such as a fall, a car or bike crash or a drowning. Many policies include a dismemberment provision that pays out a living benefit if you are in an accident that results in paralysis, or a loss of sight, speech, hearing or a limb. They generally do not cover fatal accidental injuries caused by surgery, mental or physical illness.
Typically, the plans cost less than a term life insurance policy and do not require medical underwriting. They may be a good alternative for someone that would not qualify for a fully underwritten life insurance policy or that has a severely limited budget. Some protection is typically better than no protection.
For those that can qualify for a fully underwritten policy, I recommend that you start your life insurance strategy with a traditional term or permanent life policy that pays out a death benefit, regardless of the cause of death. Then, if you choose, you can add on an extra layer of protection with the Accidental Death Benefit policy.
Accidental Death and Dismemberment Insurance is often provided through employer-sponsored plans. You will also see offers for coverage from many associations or groups such as your credit union, AAA or AARP.
Let me know if you have any questions on this coverage or would like to discuss your specific situation and what makes the most sense for you.