What is accidental death insurance?

What is the difference between term life insurance and accidental death?

If you’re researching insurance to help protect your loved ones financially – then kudos to you. It’s the right move. A life insurance policy can help ensure that your loved ones can continue paying expenses like the mortgage payments, childcare, and other day-to-day bills.

When searching for a policy to protect your family from the “what if” scenario of your death, you will be faced with multiple products, which can get a little overwhelming. We get it. Don’t let the decisions scare you off, though — finding the right policy for you and your family doesn’t need to be complicated.

Two common types of coverage you’ll come across are accidental death insurance and term life insurance. These two products both provide a payout to your beneficiary if you were to die — but that’s where the similarities end. As with any insurance product, it is important to know how accidental death insurance actually works so you can ensure you have adequate protection for your family.

Accidental death and dismemberment insurance versus life insurance

Accidental death insurance is sometimes considered as an alternative to term life insurance. And, it’s common for insurance companies or brokers to offer both types of coverage.

As the name implies, accidental death insurance — also called AD&D — provides a lump sum payout (called a death benefit) to your loved ones if you passed away from an accident, such as a car accident, bike accident, or homicide. Death from illness or natural causes is not covered under this type of insurance.

The “dismemberment” part of this policy may provide some type of living benefit if the policyholder is severely injured, paralyzed or loses a limb, but not all accidental death policies include this provision.

It’s also important to note that many accidental death policies are limited to an amount of up to $500,000.

By comparison, term life insurance provides a payout to your beneficiary if you were to die within a particular time frame — typically 10, 15, 20, or 30 years. Whether you pass away from an accident or illness does not matter with this type of coverage, which makes it a more popular, well-recommended choice. Term life insurance is not capped at $500,000 in coverage. For example, at Haven Life, the Haven Term policy is available in amounts of up to $2 million.

The limitations on how a policyholder dies can leave your family at financial risk, so you should understand the fine print.

Cost of accidental death insurance versus life insurance

At the end of the day, cost matters. And fortunately, coverage for both accidental death and term life insurance is usually affordable — it’s just a matter of how much protection you’re getting for the money you’re paying.

Let’s do some cost comparisons:

Term life insurance

A healthy 35-year old woman could qualify for a 20-year, $500,000 Haven Life term life insurance policy, issued by MassMutual, at a rate less than $20 per month. A 30-year policy would increase the pricing to about $33 per month, which would cover the woman until she’s 65 years old with limited exclusions on how she dies.

Accidental death

According to insurance broker Fabric’s quote tool, the same woman could buy a $500,000 accidental death policy, which would cover her until she’s 60 years old, starting at $30 per month. Limitations would be that if, during that 25-year timeframe, she passed away from an illness or health issue of any kind, the death benefit would not be paid out to her beneficiaries.

What does AD&D cover?

Like with any other type of insurance, you shouldn’t buy a policy until you understand what limitations may exist. Accidents involving cars, bikes, work-related machinery, falls, suffocation, choking, drowning, and fires generally are covered by an accidental death and dismemberment policy.

Additionally, most accidental death and dismemberment policies do not cover injuries or deaths caused by surgery, mental or physical illness.

Typically, the coverage is in effect until somewhere between the ages of 60 to 80 — but this can vary by insurer or broker and even by state.

AD&D’s exclusion of illness and natural causes cannot be overemphasized and must be thoughtfully considered.

Let’s let some morbid numbers do the talking:

  • Only from ages 25-44 is accidental death by car accident your greatest risk
  • The Centers for Disease Control and Prevention reports that accidental deaths are only the fourth most common cause of death.
  • The first three leading causes of death (heart disease, cancer, and lower respiratory disease) combined constitute 51.1% of all deaths in the United States. By contrast, accidental deaths account for only 5.4% of U.S. deaths.

“When referring to accidental death insurance, my father used to always say, ‘I don’t want to gamble on how I’ll die,’” says Matt Wolf, Haven Life Actuarial Lead.

Get our newsletter

There’s more great content where this came from.

When is accidental death the right choice?

AD&D is simple to purchase because it doesn’t require any medical underwriting. While this may be appealing, it’s important to know that not undergoing medical underwriting (which entails providing details about your health history and sometimes a medical exam) often results in higher prices or less available coverage because the insurer is taking on more risk.

That said, any coverage is better than no coverage, and sometimes, AD&D is a good option.

An accidental death policy may be a better fit than term life insurance if you:

  • Have been declined life insurance due to health reasons
  • Are very cost conscious because, in cases of lower face amounts like $100,000, accidental death may be a little less per month than term life
  • Have a phobia of needles and cannot take a medical exam for medically underwritten term coverage

The best thing you can do when deciding if AD&D is the right choice is to cost compare with term life insurance and make sure you understand how much coverage you’re getting, how much you’re paying for that coverage when the coverage ends, and what exclusions are in the policy. Doing so will help ensure you’re getting the best value for you and, more importantly, your family.

How does term life insurance work?

A term life insurance policy provides a death benefit in a specific amount (called the policy face value) if the policyholder passes away within a specified term length. Life insurance buyers can choose among varying term lengths and face amounts in order to purchase the right coverage to fit their family’s needs. An online life insurance calculator offers a simple way to pick the right coverage.

With term life insurance, there are few exclusions on whether a policy will be paid out — usually it’s limited to suicide within the first two years or an illness that was intentionally not disclosed in the application process.

For many people, medically underwritten term life insurance is a good value. Premiums are usually affordable, and you have coverage during the years your family needs it most — until your mortgage is paid off, your spouse is retired, or your kids are no longer financially dependent.

Easy + Simple + Inexpensive

“The easiest, simplest process for receiving term life insurance. And the premiums were the lowest quote.” —Michael

Learn more
Average rating as of March 2018: 9.4/10
Read more at TrustPilot

How to buy term life insurance

Buying quality term life insurance has become much easier recently thanks to modern technology. You can apply online and receive an instant decision on coverage eligibility. If a medical exam is needed, you’ll be notified on the spot, and, with Haven Life, you have 90 days to take it. There’s no reason to fear the medical exam either — when an exam is needed, most Haven Life customers find it to be a simple process.

Additionally, when choosing a company to financially protect your family, make sure you check their ratings in your researching process. When you’re buying a policy, it’s a promise to pay out a death benefit to your loved ones over the next 10 to 30 years. Life insurance companies receive ratings from independent agencies based on their assessment of the insurer’s financial strength and claims-paying ability. The higher the rating, the higher the rating agency’s assessment that the insurer will be around to pay the policy’s benefit.

What’s the best choice – AD&D insurance or life insurance?

When purchasing insurance to financially protect your family from the worst case scenario, you, of course, want the comfort of knowing that there aren’t significant contingencies on how you pass away.

AD&D insurance could be a good option if you are unable to qualify for medical underwriting under a life insurance policy. It may also be a good option if it is the only coverage you can afford. However, if you are healthy and have an uncomplicated medical history, then you’ll usually get a better value with a medically underwritten term life insurance policy.

Life insurance is extremely valuable to your family and one of the most thoughtful gifts you can provide your loved ones. For many people, term life insurance is a better option than AD&D insurance to help financially protect your family because you are covered regardless of if you were to die from an accident or illness.

Life insurance that's actually simple.

Estimate your rate

Rachel Parisi is a freelance writer and attorney. She focuses her writing on insurance, financial services, and employee benefits. In her previous life, she served in the United States Air Force as a missile combat crew commander (think ‘Wargames’)

Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In New York, Haven Term is DTC-NY 1017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

Get the latest news

Apply now