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How do accident and life insurance differ?

It’s a cliché to say that accidents will happen, but it’s a cliché because it’s true. Before covid, accidents were the third leading cause of death in the US, behind only heart disease and cancer.

As a result, you may find it makes sense to get accidental death and dismemberment insurance. But it turns out that’s not necessarily the case, especially when compared to the cost and value of life insurance.

To explain the differences and why you might want one or the other (or potentially both), we’ve broken them down below.

What is accident and dismemberment insurance?

Death and dismemberment (AD&D) insurance is, as the name suggests, insurance that covers you if you die or are seriously injured in an accident. AD&D policies usually state what types of accidents are covered and what type of damage or dismemberment is included in your coverage.

What the accident and dismemberment insurance covers

Accidental death and dismemberment policies may ̵

1; but not always – cover accidental death from:

  • Car accidents
  • Airplane crashes
  • Other vehicle accidents
  • Firearm accidents
  • Workplace accidents
  • Fire-related accidents

AD&D insurance often also covers the following, if they result from an accident listed above:

  • Loss of limbs
  • Loss of vision
  • Permanent paralysis

What the accident insurance does not cover

The nature of insurance is that insureds pay money into a pool, and that pool is in turn used to pay out money to any insured who experiences hardship, such as death or dismemberment.

Underlying the transaction is the idea of ​​risk – actuaries estimate how likely something is to happen, to ensure there is enough money to cover an insurance claim.

With accident and dismemberment insurance, the idea is to give you protection should something unexpected happen. (There may be exceptions for particularly high-risk activities, such as skydiving, or accidents you cause through impairment from drugs or alcohol. You should check your policy.)

And as you might expect from the word “accidental” (it’s right there in the name!), it doesn’t cover death or dismemberment due to non-accidents, such as illness or disease.

Another thing to keep in mind: Many accidental death policies are limited to $500,000 in coverage, much less than what you can typically get from life insurance.

What is the cost of accidental death?

Accidental death insurance is generally quite affordable, especially compared to something like permanent life insurance. As an example, Insurance Fabric estimates that a 30-year-old woman in excellent health can get 30-year $500,000 accident insurance from $26.45 per month.

But it’s important to think about what you’re getting for your money. You will be covered in the event of an accident, yes. But your loved ones won’t receive a payout if you were to die from significantly more common causes (such as heart disease, including heart attack or cancer), or less common (but still common) causes such as Alzheimer’s or stroke.

In fact, the CDC reports that only 6% of deaths are caused by accidents – leaving your loved ones vulnerable if you die from one of the other 94% of causes.

Who needs accident insurance?

Because of these limitations, it is often best to think of accident insurance as a supplement to life insurance. (More on life insurance below.)

Accident insurance can also be a good choice for someone who cannot qualify for life insurance due to their health. It may also make sense if you can’t afford life insurance, although it’s worth noting that life insurance is often about as affordable as AD&D, especially if you’re young and relatively healthy.

What is life insurance?

Traditional life insurance is insurance coverage that offers a payout (or death benefit) to your loved ones in the event of your death. There are several types of life insurance (including permanent policies, such as whole life policies), with term life insurance often being the most affordable.

With term life insurance, you buy a policy with a term that lasts between 10 and 30 years, and if you die during the term, your beneficiaries receive a payout equal to the value of your policy. If you don’t die, your policy expires and you can rejoice in having survived your term.

What life insurance covers

Notably, life insurance covers your death from basically any cause. This is in contrast to accident insurance, which only covers death from a covered accident.

What life insurance does not cover

Not much, actually. The most important thing is to be honest during your application. If it turns out that you lied during that process – by hiding an illness, for example, or a smoking habit – you risk non-payment of the death benefit.

There is also a period, usually two years, called the competition period.

If you die during that time, the insurer can review your death to make sure it wasn’t the result of something you hid during your application. Committing suicide during the fighting period may also result in non-payment of your death benefit. (If you are having suicidal thoughts, call 988 or visit 988lifeline.org for help.)

How much does life insurance cost?

Generally speaking, term life insurance is the most affordable type of life insurance. It’s meant to cover the years when you’re earning and covering the expenses of a dependent (think: your children) or paying off a big expense like a mortgage.

Policyholders typically plan for their term to expire after the kids move out and the mortgage is paid off. Since these years tend to be when you are younger and healthier, the cost of insurance is generally lower.

For example, the same 30-year-old woman in excellent health we mentioned above can get a 30-year, $500,000 term life insurance policy from Haven Life starting at $24.40 per month—a dollar less than comparable AD&D insurance ($360 less over the policy’s lifetime), and it covers you for a greater number of causes of death.

Another advantage of life insurance is that the coverage limit is generally higher – at Haven Life, you can buy a policy worth up to $3 million. In general, experts recommend a policy worth 5 to 10 times your annual salary, which means a $500,000 policy — the typical AD&D cap — may not be enough.

Here are some examples of what someone in excellent health might pay for a Haven Term policy, issued by MassMutual or its subsidiary, CM Life:

Age Sex Police length Coverage amount Monthly premium
25 Male 30 years $250,000 $17.49
25 Woman 30 years $400,000 $19.55
35 Male 20 year $500,000 $20.72
35 Woman 20 year 600,000 USD $19.75
45 Male 15 years $750,000 $50.62
45 Woman 15 years 1,000,000 USD $49.40
Estimates based on pricing for qualified Haven Term applicants in excellent health. Price differences will vary depending on age, health status, coverage amount and term length. These rates do not reflect rates for applicants in DE, FL, ND, NY and SD.

Can you have both?

Good question. It’s true, they’re not mutually exclusive – you can have life insurance and accident and dismemberment insurance.

However, for many people, owning both policies is redundant, given that life insurance coverage includes accidental death. (For some people, it’s the second “D” in AD&D that forces them to carry both types of insurance: dismemberment, which isn’t usually covered by life insurance.)

Many life insurance companies offer AD&D as a rider, meaning you can pay to add this coverage to your life insurance policy. (Haven Life does not currently offer this.)

Find the right insurance for your needs

Finding the right life insurance doesn’t have to be complicated. At Haven Life, our online application process means you can apply – and possibly be approved for coverage – during your lunch break.

Get started by getting a quote online today.

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