How It Works

• Accidental death insurance covers death in cases of accidents, such as car and plane crashes. It does not cover death due to illnesses or old age. Accidental death insurance often also provides coverage for dismemberment, such as loss of limb, hand or an eye. Accidental death and dismemberment insurance policies will specify the payout for various covered events. For example, a policy may pay $500,000 for an accidental death and $50,000 for the loss of an arm.
  
  

Current Coverage

• Many consumers already have accidental death insurance, even if they are not aware of it. Credit card companies typically offer accidental death insurance coverage for travel purchases made with the card. For example, if a credit card provides coverage and the consumer uses it to buy a plane ticket, the consumer has coverage in case of a plane crash. Some banks, credit unions, travel clubs and organizations provide coverage to members as well. A consumer should determine whether he has coverage and what the policy covers before making a purchase.
  
  

Coverage Isn't Needed

• In most cases, standard term or whole life insurance policies pay out death benefits for an accidental death. In the case of an auto accident, many auto insurance policies may also pay out a death benefit. Before considering the purchase of an accidental death insurance policy, a consumer should determine what her current life insurance and auto insurance policies cover. If a consumer does not have life insurance, but has dependents or other people counting on her for financial support, the consumer should purchase standard life insurance before considering accidental death insurance.
  
  

Why Buy Coverage

• A person who has a high risk job or hobbies may want to consider buying accidental death insurance, especially if standard life insurance does not cover the risks. For example, many life insurance policies will not pay out for death due to sky diving or rock climbing. However, many accidental death insurance polices will not cover these risks either, requiring the consumer to find a specialized product to meet his needs. Adding a rider to a standard life insurance policy to insure these risks may be another option for a consumer to consider.