Are Accidental Death Policies the Same as Life Insurance?

Insurance is a complicated field, not the least because the insurance companies work so hard to make it confusing. The less consumers know about the industry, the more power insurers have in issuing policies and recommendations, and in making determinations about coverage. Many of the different types of insurance seem to overlap. One question we often hear from clients: Are life insurance policies and accidental death policies the same thing? Continue reading to learn about the difference between accidental death insurance and life insurance. Call a knowledgeable Los Angeles life insurance denial lawyer if you have any legal issues or questions regarding a California life insurance policy or claim.

Accidental Death and Life Insurance Are Very Different

The short answer is: No, accidental death insurance and term life insurance are not the same thing. While they do both offer payouts on death, they differ in other important respects. They are two very distinct types of policies that each offer a very different scope and level of coverage.

Life Insurance

Term life insurance is basic coverage that pays out if you die, regardless of the cause of death. There may be certain exclusions, such as death caused by suicide or death that results from criminal activity, but those exclusions will be specific and explicitly identified in the policy. As the policyholder, you choose the amount of coverage and the term length.

Terms typically range from 10 to 30 years; if you die after the term ends, then your beneficiaries do not receive a payout. You can choose to renew the policy at the end of the term period or buy a new policy. Your premiums are likely to be higher when you renew or purchase a new policy, as you will be older and will likely have more medical conditions under your belt. But as long as you do not commit suicide within the exclusionary period or otherwise violate the terms of the policy, your beneficiaries will be covered when you pass.

Accidental Death & Dismemberment

Accidental death and dismemberment (AD&D) policies are also intended to pay out upon the death of the policyholder but typically have much more restrictive coverage. Rather than paying out when you die regardless of the cause, AD&D policies will pay a death benefit only when the policyholder dies in an accident. AD&D policies typically cover dismemberment in a nonfatal accident as well, paying out a predetermined amount as stated in the policy.

AD&D policies are usually included as a supplemental addition or rider to a term life insurance policy. You can buy a separate AD&D policy if you choose to do so, but it is less common than simply adding AD&D coverage to your broader policy. If you have an AD&D supplement as part of a general term life insurance policy, and you die in an accident, the AD&D provision will pay out additional benefits. For example, if you have a $300,000 term life insurance policy and a $100,000 AD&D rider, and you die in an accident, your beneficiaries will receive $400,000.

If you have only AD&D coverage, your beneficiaries will receive nothing should you die of other causes. Death due to illnesses such as cancer, death from a drug overdose, and other forms of non-accidental death will not be covered. AD&D policies are thus not a viable replacement for life insurance, although they can be a useful supplement.

That being said, AD&D policies are generally cheaper than life insurance policies, precisely because they cover a more limited range of situations. Additionally, AD&D will payout when you are seriously injured in an accident, even if you survive, whereas life insurance will only kick in should you pass away. AD&D policies often have a graduated range of how much of the face value of the policy will be paid, depending on the nature of the dismemberment. Your policy might, for example, pay 100% of the face value for total blindness or quadriplegia, but will only pay 50% of the face value for loss of a single limb.

If you are unsure which policy makes sense for you, or if you’ve been the victim of a wrongful claim denial or bad faith by a California life insurance or accidental death insurance carrier, get advice and representation you can trust from the Los Angeles insurance bad faith legal team at Gianelli & Morris. Call today for a free consultation at 213-489-1600.