Life Insurance Vs. Accidental Death and Dismemberment

When it comes to insuring your life, you have the option between purchasing traditional life insurance and accidental death and dismemberment insurance. While these options are similar and they do provide a death benefit, there are some key differences between them. Accidental death and dismemberment insurance only pays as a result of accidents, while life insurance is a broader coverage.

Life Insurance

• Life insurance is a type of coverage that pays a lump sum of money to a deceased's beneficiaries when they die. This type of coverage pays out to your beneficiaries for any type of death that occurs. You could die from natural causes, an accident or from a terminal illness and still receive the same benefit. Some life insurance policies also provide a payout if an insured is diagnosed with a terminal illness.

Accidental Death and Dismemberment

• Accidental death and dismemberment insurance is a different type of insurance policy that only pays when an accident occurs. If a policy holder dies as a result of an accident or is dismembered, the insurance will pay a lump sum. The money will be paid to the beneficiary of the policyholder. With this type of insurance, nothing is paid if the policyholder dies from a terminal illness or from natural causes.

Rider

• Besides getting a policy that covers accidental death and dismemberment, you could also add this type of coverage as a rider to your traditional life insurance coverage. This can provide double indemnity if you were to die in an accident that is covered in your policy. If you die in an accident with this type of rider, the benefit of your policy doubles. For example, if you had a $500,000 policy, your family would then get $1 million instead.

Dismemberment

• With accidental death and dismemberment insurance, you get part of the benefit from your policy if you are dismembered. This type of policy will generally pay you half of what your total policy is worth for each member that is lost. For example, if you lose an eye, you would get half of the policy payout. The rest of the policy would then pay out if you lost another part of your body.

Cost

• One of the differences between these two types of insurance policies is the cost. Life insurance is generally more expensive than accidental death and dismemberment insurance. Insurance companies have to charge more for traditional life insurance because this type of policy has a broader type of coverage than accidental death and dismemberment. Accidental death and dismemberment insurance only covers accidents, and accidents only account for a small percentage of deaths when compared to other types of death.