Copyright (c) 2010 Mark Manderson
A lot of good advice is circulated on how to get cheap term life insurance, and shoppers are generally pretty good about using independent agency websites to compare quotes online and sometimes even counseling for free with an agent. However, many of these shoppers can get the protection that’s most important to them and save more money by opting for accidental death and dismemberment insurance instead of term life insurance.
Accidental death and dismemberment insurance may not suit every purpose, but it is a cost-effective choice for the most popular purpose of life insurance: to provide financial indemnity in case of an unexpected and untimely death. It is chiefly during this period that Americans have cause to concern themselves with the financial wellbeing of their spouses and children, and during this age range, accidental death is high on the list of probable causes of death.
What’s covered? What’s excluded?
Coverage and exclusions vary from one insurer to the next, but accidental deaths typically include what one normally thinks of as an accident (e.g. such as a harpoon through the eye) and also unforeseen deaths which don’t usually fall under the term “accident.”. What’s not covered is old age, death by illness, and suicide.
From age 20 to age 50, then, accidental death and dismemberment insurance may be just the right life insurance product. When you get older and your risks change, you can always purchase a different kind of coverage.
Can you afford the risk of excluding non-accidental deaths?
No matter what insurance product you buy, you’re going to find yourself holding on to at least some modicum of financial risk. There is always a compromise between risk and expense. If your likelihood of dying from old age, illness, and suicide is extremely low (as it is for most people aged 20 to 50) then chances are that accidental death and dismemberment insurance can completely replace your ordinary term insurance with scarcely an elevation to the risk you still carry.
What’s this about dismemberment?
Accidental death and dismemberment insurance pays out an indemnification, not just if the insured dies, but also if the insured loses the use of a limb, digit, eye, or ear.
As before, just what constitutes a “dismemberment” may vary from company to company, and so may the size of the death benefit. Logically, an accidental death and dismemberment policy will not pay a benefit of its full face amount for an individual who loses a thumb but is otherwise alive and unharmed. (The policy may pay out a full benefit for some non-lethal accidents, as with the loss of two limbs, however.) The insurance contract indicates what it will pay for each of the covered dismemberments.
