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Understanding Accidental Death Insurance

Personal Finance
young father, mother and son fly a kite at sunset as parents consider buying accidental death insurance

While it may be difficult to think about, accidents can happen — so it's still important to consider taking steps to prepare for the unexpected. You can't always control what happens in life, but you can consider an insurance policy that will help make the unexpected a little more manageable.

With accidental death insurance, you can help protect your family from the financial cost of a fatal accident. Here, we will cover the basics of this insurance type and help you understand if adding this policy to your insurance portfolio is the right choice for you.

What Is Accidental Death Insurance?

Accidental death insurance is a version of life insurance that only covers death by accidental causes. If you die in a car crash or in a fall down the stairs, for example, this insurance policy will pay out a death benefit. However, if you die in a way other than an accident, this insurance won't pay anything to your beneficiaries — which means that it doesn't cover death by illness or old age.

Accidental death insurance can be purchased as a standalone policy to cover one person or an entire family — or as an accidental death benefit rider on a whole, universal or term life policy. If you choose a family accidental death policy, it'll cover you, your spouse and your children in the event of a fatal accident.

In addition, there are accidental death policies that pay a cash benefit if you become seriously injured in an accident. Each policy lists the specific injuries it would cover, such as paralysis, a lost limb or a lost eye. These are called accidental death and dismemberment policies.

When Could It Be a Good Fit?

Accidental death insurance could be useful for those who would like some additional coverage. This insurance type can also be an appealing choice for younger applicants, who are more likely to die in an accident than by illness.

If you do consider accidental death insurance, it's important to understand its limitations. Remember, this coverage is not full life insurance coverage and will only pay your beneficiaries after an accident. If you buy an accidental death insurance policy, don't assume you're protected for every situation. It could best be viewed as a complement to a life insurance policy.

Accidental death insurance also has some exclusions. Typically, it will not cover deaths from dangerous hobbies like car racing, skydiving or bungee jumping. These policies also may not cover death from suicide, driving under the influence or a drug overdose. The policy may exclude death from a surgical procedure as well. Be sure to check for exclusions before signing up for a policy.

Any Special Considerations?

Accidental death insurance generally costs less than other life insurance policy types. Qualifying for accidental death insurance might also be easier because it does not require a medical exam. Regular life insurance plans may deny applicants with health problems, but this is not an issue for accidental death insurance, as it only covers accidents.

Coverage also starts immediately after you sign up. These policies can also have a maximum age limit, so you might not be able to buy coverage if you're older than, say, 65. Additionally, if you have dangerous hobbies like skydiving or car racing, the insurance may be more expensive, or you may not qualify for coverage.

While you cannot prevent every single accident, you can help protect your family from the cost with accidental life insurance. By understanding this type of policy's benefits and limitations, you can decide if this solution is right for you.

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Information provided is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. Western & Southern Financial Group and its member companies (“the Company”) does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.