When discussing Accidental Death Policies, we here at JustBuryMe typically like to start off with a brief description of what they are, then discuss the potential DISADVANTAGES of purchasing an accidental death policy, and lastly discuss some of the their benefits as well as when they may be useful to a client.
Now this may seem…
Like we have a negative bias towards Accidental Death Policies, but this couldn’t be further from the truth. We here at JustBuryMe, simply don’t want any of our clients to confuse an Accidental Death Policy with that of an ACTUAL LIFE INSURANCE POLICY which will provide coverage in the event of an “accidental” cause of death as well as a “natural” case of death.
With that being said…
Let’s actually discuss what an Accidental Death Policy is and how it will differ from a “true” fully underwritten life insurance policy.
Accidental Death Insurance Defined.
Accidental death insurance DEFINITION: policies designed to provide insurance coverage in the event that you were to die from an accidental cause of death.
Now for the purposes of our discussion here, we’ll define an accidental cause of death as something that is not related to any type of illness.
Examples of what would be considered an accidental cause of death would include:
- Slip and fall.
- Motor vehicle accident.
- Victim of crime.
- Natural disaster.
- Etc…
Now while it’s great to have insurance coverage for these types of “accidental” causes of death, it’s important to remember that with an Accidental Death Insurance Policy, you will not be insured for “natural “causes of death.
Examples of what would be considered an “Natural” cause of death (which would NOT BE COVERED by an Accidental Death Insurance policy) would include:
- Cancer.
- Heart Disease.
- Stroke.
- Diabetes.
- Or any other “illness” based cause of death.
So….
As you can see, the main disadvantage to purchasing an Accidental Death Policy is that it won’t provide a death benefit to your beneficiary if you die due to natural causes.
Now with that covered….
Let’s take a look at what some of the advantages of an Accidental Death Policy and examine when these types of policies may be useful.
Pros to purchasing an Accidental Death Policy
There are several advantages to purchasing an accidental death policy that aren’t always available when compared to traditional life insurance coverage.
These advantages would include:
- No medical exam required.
- Because Accidental Death Policies do not provide coverage for “natural” causes of death, purchasing an accidental death policy will not require you to take a medical exam or answer any health related questions.
- Competitively priced.
- Accidental Death Policies can also be very affordable, particularly when compared to some traditional term or whole life insurance policies.
- Coverage can begin immediately.
- Lastly, because your Accidental Death Insurance won’t require a medical exam, your insurance should begin immediately upon receipt of payment, which means you won’t need to wait several weeks before your policy will be able to go in force.
Examples of when an Accidental Death Policy may make sense.
Before we dive into several “real world” examples where purchasing an accidental death insurance policy would make sense, we do want to stress the point once again that we here at JustBuryMe, will never use an Accidental Death Insurance Policy as our first option.
We always want to help our clients find a true LIFE INSURANCE policy that will provide coverage for them regardless of whether or not they die from an illness or an accident.
Unfortunately, this may not always be possible which is why, when all other options have been exhausted, we will frequently suggest that a client purchase an Accidental Death Policy when no other options remain or until a future date whereby the client may become eligible for either a simplified issue or guaranteed issue life insurance policy later on.
With that said, let’s now take a look at a few examples whereby a client may wish to purchase an Accidental Death Policy.
Traditional Term or Whole Life Insurance is not an Option.
Because traditional term and whole life insurance policies will require one be able to qualify for them, in some cases an insurance applicant simply won’t be eligible. For these clients, an Accidental Death Insurance Policy may be the only option that they have.
We here at JustBuryMe would simply want to rule out the possibility of being able to qualify for a Guaranteed Issue Life Insurance policy prior to recommending Accidental Death Insurance.
Need Exceeds Budget.
In this example, we may have a client who needs a certain amount of life insurance to protect their family for a set number of years, but unfortunately, the cost of such insurance is simply out of reach for him or her at this time. In this situation, an Accidental Death Insurance Policy may be one option to “supplement” the “true” life insurance that he/she is purchasing with the understanding that this “supplemental” coverage will not cover natural causes of death.
Can’t qualify now but will be able to shortly.
There are a lot of factors that will come into play when one is applying for a traditional term or whole life insurance policy. Many of these factors will focus on one’s health, while others will be concerned about “lifestyle” choices. These factors can and often will significantly determine the outcome of one’s life insurance application, and could potentially change over the course of time.
Which means that its completely possible that an individual may not be eligible or may not be able to afford their current rate/premium for a traditional term or whole life insurance policy today, but may be able to 6 months from now or perhaps 6 years from now.
For example:
- Someone who has recently quit smoking may see a significant decrease in the premium that they would be required to pay for a traditional term or whole life insurance policy if they waited a few months before applying for coverage.
- Someone who has multiple DUI’s on their record, but will be eligible once they have demonstrated a clean driving record for a year or two.
- Someone who is in remission for cancer, but hasn’t yet been cancer free for the required amount of time.
- Someone who is currently on probation for a felony.
- Etc, etc…
Each of these examples could potentially benefit by purchasing an Accidental Death Policy as a “bridge policy” until one day in the future when they may be eligible to purchase a traditional term or whole life insurance policy.
Now these are just a few examples…
At the end of the day, only you will be able to determine if an Accidental Death Insurance Policy is right for you. Additionally, we would also like to stress the importance of actually READING your Accidental Death Insurance Policy once it is in your hands so that you can fully understand of the benefits and limitations of the policy that you have selected.
The good news is that most if not all Accidental Death Insurance Policies will come with a 30 day free look period which means that you will have 30 days to review your policy to make sure that you are completely satisfied with it, or your money back!
Now we know…
That we’ve discussed a lot here in this article and we don’t expect you to be an expert on everything that we’ve talked about, but what we do hope that you take away from this discussion is that an Accidental Death Policy is going to certainly have its disadvantages vs a traditional life insurance policy, but that does not mean that it’s all bad. It just means that you need to understand what you’re getting, when you purchase one, and determine if you’re “OK” with that.
Lastly…
Should you have any questions what so ever, you may always feel free to give us a call here at JustBuryMe.com, we’re always thrilled to help!