What does accidental death insurance cover?

What would happen to your loved ones if you were to pass away due to an accident? Find out if accidental death insurance cover is for you.

Although the death of a loved one in an accident isn’t something you would normally want to think about, it does happen and having accidental death insurance can save a lot of trouble for the ones you love.

What is accidental death insurance?

Also known as a form of life insurance, accidental death insurance provides a lump sum payment to your nominated beneficiary in the event you accidentally pass away. 

Insurance for accidental death is cover for when you unexpectedly die from an event that may be unintentional, violent or external, like drowning or a car accident. However, this cover does not apply if your death is a result of a medical condition or pre-existing issue. 

The key difference between accidental death insurance and other forms of life insurance is that the former only covers death by accident. For this reason, premiums for life insurance are generally more expensive as they cover death for a range of other reasons including illnesses. 

Insurers may define ‘accidental death’ differently so it is important to check what it includes or does not include. 

For instance, your loved one may not be able to make a life insurance claim for accidental death if you pass away due to:

  • Cancer
  • Suicide
  • Substance or alcohol abuse
  • Professional sport
  • Act of war

What is the payout for a life insurance claim due to accidental death?

In the event that you or your loved one passes away due to an accident, the amount payable will depend on the level of cover offered by the policy and increase each year in line with the Consumer Price Index. The age of death does not affect the payout. Payments for accidental death are generally made after 90 days of the incident occurring.

Ordinarily, you could expect not to pay taxes on life insurance payouts for accidental death. However, there are some exceptions especially if the holder of the policy has elected to pay out to an estate rather than a beneficiary.

Before you take out an accidental death policy, you should speak to a life insurance lawyer as they can advise you according to your circumstances. 

Should I get accidental death insurance cover?

With so many different life insurance policies available, it can be confusing to decide whether accidental death insurance cover is right for you. One of the main attractions of accidental death insurance is that the premiums are much lower than general life insurance. 

People who take out accidental death insurance tend to:

  • Have active lifestyles
  • Be families with small children
  • Be on a budget
  • Be unable to obtain life insurance due to medical issues
  • Have pre-existing disabilities

Accidental death cover is not a topic that people want to dwell on but if your situation is such that your loved ones may benefit from it, you may want to consider getting a policy. Masselos & Co Lawyers are here to help and can offer experienced and compassionate legal advice. Book a free consultation today. 

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