If you are looking for life insurance to protect your family or business, accidental death insurance is not a realistic alternative. Even if you are young and super healthy and feel that your highest probability of death would be an accident, you would be shortsighted to think that accidental death insurance provides adequate financial security.
Accidental death insurance also referred to as accidental death and dismemberment insurance (AD & D) is designed to pay a set amount to a named beneficiary if the covered individual dies as a direct result of an accident. AD & D insurance is usually very inexpensive when compared to ordinary life insurance because of the limited payout scenarios and policy limitations. However, as with most things, you get what you pay for.
Ordinary term or whole life insurance provides comprehensive coverage for any cause of death (other than suicide in the first two policy years) including accident or sickness. This simply isn’t the case with accidental or accident and dismemberment insurance. Following are some common coverage Exclusions in an accidental insurance policy.
“No benefits will be paid due to Injury or death caused by, contributed to by or related to the following and/or their treatments and/or complications thereof: Sickness; Suicide or intentional self-inflicted Injury or poisoning; War, declared or undeclared; Acts of terrorism; While committing or attempting to commit a crime; Taking of illegal or
non-prescribed drugs, or addiction or misuse of prescription drugs; Alcohol abuse or addiction, or being under the influence of alcohol, as defined by the vehicle code of the state or province in which the Accident has occurred; Mental or Nervous Disorders; Pre-Existing Conditions; Subjective Pain or other symptoms unless supported by objective medical findings; Pregnancy and pregnancy-related conditions including but not limited to fertility, pre-natal care, childbirth, miscarriage, abortion or postpartum conditions; Nuclear,
biological or chemical exposure as a result of war, declared or undeclared or terrorism.”
As you can see, these exclusions significantly limit the payout scenarios of accidental death policies. Therefore, it is foolish to think that you can cover a real need for life insurance with an accidental death policy.