What is the Difference Between Life insurance and Accidental Death and Dismemberment Insurance(ADD). 2

life insruance vs accidental death

We  have many customers who come to us under the impression that their Accidental Death Policy they purchased is an all cause life insurance, which it is not. A lot of people own these type of policies but are unaware of their limited payout. I personally blame the broker who sold the policy without properly educating the consumer on the big difference. There is more than few big agencies that sell these policies since it is easy to place and faster to get paid.

To understand the difference let’s define each type.

Life Insurance Policy

Is an agreement between you and the insurance company that promises to pay the listed beneficiaries a large sum of money in exchange for a premium in an event of death. Life insurance will cover all causes of death except for suicide(which can be contested in the first two years only). Regular life insurance policies will in most cases require a medical exam and underwriting which can take between 48 hours to a few weeks. There are how ever companies that offer no medical exam options with quicker underwriting.

Accidental Death and Dismemberment Policy(ADD).

The company will only pay out a lump sum in the event that you die due to an accident. Also there is a partial benefit payout for a loss of one or more limbs. Please be aware that if your death is due to an illness or natural death there will be no payout. This type of coverage can be acquired with no exam and no underwriting for same day effective date. Since this coverage is a limited form of life insurance the monthly premiums are reduced. Accidental death can be added as a rider to a traditional life insurance plan to pay out double death benefit in loss of life due to an accident(aka double indemnity).

Both types of plans have their place for consumers but the key is to be aware and not be misled. We typically only recommend an accidental coverage if a person can’t get anything else due to an uninsurable condition or to add to an existing term life insurance plan that they have. This is very important topic because it can be a difference between a child receiving a lump sum to not getting a dime because their parent passed away from an illness and not an accident.

Not sure what type of policy you bought or need, call us for any questions at 888-492-1967 or get an instant quote online.

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About Mack Dudayev

Mack is owner and life insurance expert at InsureChance. On a mission to create a way everyone can understand, afford and attain the right life insurance coverage to protect their financial responsibilities.

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2 thoughts on “What is the Difference Between Life insurance and Accidental Death and Dismemberment Insurance(ADD).

  • nelzen3@msn.com'
    Marilyn Nelson

    Thank you very much. Your web site is the first one that I found that puts the definitions of the policies in simple terms that I can understand. I had an accidental life insurance policy through work and I was concerned about what type of coverage it provided. I tried to get an explanation from the company, but it was still not clear to me. Instinctually, I cancelled the account, but I was still not 100% sure of what I had done. Thank you for explaining the coverage so that now I do not have any regrets!

    • Reply
      Mack Dudayev Post author

      You are quite welcome!! It is a pet peeve of mine that many agents and companies fail to explain the difference on something as important as life insurance. Thank you for your feedback and if there are any other questions that you have please feel free to ask!