Life Insurance & Annuities Forum

Oct. 4, 2007

Are life insurance policies and accidental death policies two different things? My husband and I want to get life insurance policies that cover each other and the children if anything should happen (be it someone is hit by a bus or gets a terminal illness). Since accidental death seems to be an option on life insurance policies, I can only assume that many life insurance policies don't cover non-illness related death. Am I right?

Dawn, Massachusetts

A standard life insurance policy will pay the death benefit to the person named as the beneficiary regardless of the cause of death, accident, or illness.

Accidental Death & Dismemberment (AD&D) insurance pays out in the event of a fatal accident or an accident that results in the loss of a limb or eyesight. If you have other forms of insurance, it offers an added layer of protection.

To receive AD&D benefits, your death or the loss of a limb or eyesight must occur within a certain time frame after an accident, usually within three months, or your death must be a direct result of the injuries you sustained in the accident.

The accidental death options you see on many life insurance policies are what are known as "riders" — modifications to the original life insurance policy. These accidental death riders are generally available so that if the insured person dies of accidental causes, the life insurance policy pays out more than the original face amount of the policy.

These accidental death riders are also sometimes called "double indemnity clauses" because they are typically written to provide twice the face amount of the life insurance policy in the event of an accidental death.

So, for example, if you had a $250,000 life insurance policy, it would pay your beneficiary $250,000 when you died, regardless of the causes. However if you had a double indemnity clause in the policy and you died as the result of an accident, your beneficiary would receive $500,000.

You should be careful to read the accidental death clause in the contract very closely however because it will pay out only in the situations that are listed in the contract.

For more information, read The basics of accidental death and dismemberment insurance.

Back to the Forum

Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.