If a person dies in a car accident, does the policy benefit double?

No, there's no clause in an auto insurance policy about benefits doubling due to death. You might be thinking of an accidental death and dismemberment policy, which is insurance that pays out in the event of accidental death or loss of a limb or eyesight.

AD&D policies are relatively inexpensive and straightforward and might seem like a good deal at first glance. But they're not a substitute for a standard life insurance policy. The policies are cheap because the odds of accidental death or dismemberment are small, so relatively few claims are actually paid out. Once you're older than 45, you're more likely to die from natural causes than from an accident, according to a 2009 National Center for Health Statistics report.

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Life insurance is a better option if you're looking for a way to protect your family in case something happens to you; however, AD&D policies can be a good addition to life insurance if you have a dangerous job. Life insurance offers broader coverage than AD&D policies, such as dying from a heart attack, cancer or natural causes. Term life provides coverage for a certain period of time, such as 10, 15 or 20 years. If you die within that period, your beneficiaries collect the policy's benefit. Whole life insurance, a type of permanent life insurance, covers you for your entire life, so beneficiaries collect no matter when you die.

If you're still interested in an AD&D policy, read the fine print to see what's covered. Policies often contain several exclusions, and they do not cover injuries or death that stem from policyholders intentionally hurting themselves.

For more, see the basics of accidental death and dismemberment insurance.