Accidental Death insurance
Accidental death life insurance will pay a lump sum benefit to your beneficiaries should you die as a direct result of an unforeseen and unavoidable occurrence out of your control. Accidental death is usually bought as a stand-alone policy, but can also be purchased as an additional option on your life insurance policy.
Published May 4, 2018
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What does accidental death insurance cover?
Accidental death insurance only covers you in the event of accidental death. Accidental death is generally defined as a death resulting from a physical or bodily injury caused solely and directly by violent, external and unexpected means. Meaning, your death should in no way be as a result of your physical or mental health preceding the accident.
Examples of the types of accidental death include death caused by falling, work accidents, electrocution and fire. However, the most predominant cause of accidental deaths in Australia is due to road accidents.
The latest Australian road fatality data (December 2016) shows a 7.9% increase in road deaths, compared to 2015. A total of 1,300 people died in 2016 due to car crashes:
A study conducted by Monash University Accident Research Centre (MUARC) during the year 2000 to 2011, found that 13.5% of crashes were due to intoxication, 11.8% were because of the driver falling asleep, and 3.2% of the crashes happened because of passenger interaction.
161 people died on Western Australia roads in 2015, 15% of which were between the ages of 25 and 29 years old.
What is the accidental death benefit?
An accidental death benefit provides a lump sum payment in the event of an insured person dying due to an accident occurring during the period insured. Premiums are generally not tax deductible. However, the lump sum benefits might be tax-free.
Make sure your family will be taken care of. Don’t leave their financial security to chance.
How does accidental death insurance work?
You can purchase accidental death life insurance at any time, as long as you are between 18 and 69 years old. It’s your decision how much cover you want, as long as it does not exceed the limit provided. Your death benefit can be bought as a stand-alone policy or to compliment your life insurance cover.
However, be aware there are certain exclusions and limitation to this type of policy.
Accidental death insurance companies
There are a number of companies that offer accidental death cover in Australia including, AIA, CommInsure, Clearview and MLC. We make it easy to compare these companies online to help you find better value!
Life vs. Accidental Death Insurance
| Accidental Death Cover | Life Insurance |
| Death benefit only pays out as a result of death due to an accident within 90 days of the accident occurring. | Death benefit pays out for both natural and unnatural (accidental) causes, including old age, cancer and most types of illnesses, except suicide in the first 13 months. |
| Lump sum benefit payout. | Lump sum benefit payout. |
| Premiums are more affordable because your benefit will only payout if you were to die as a direct result of an accident. | Premiums are generally more expensive because you will be comprehensively covered for various causes of death. |
| The premium rate is usually standard. | Premium rates are dependent on various factors, such as your age, gender and medical history. |
| Generally not medically underwritten or minimal underwriting is required. | Full underwriting is usually needed to assess your current lifestyle and health factors in order to determine your risk to the insurer. |
| Very quick application process. | Depending on how you purchase life insurance (directly or advised) the application process can require a more detailed application process. |
| Generally the Accident Death Benefit lump sum pays out faster. | Claims generally take longer to process, however, a percentage of life cover will pay out immediately to cover funeral expenses. |
| Life Insurance also offers: Additional policy options are available. More flexible premium styles to choose from. |
Exclusions and Limitation for an accidental policy
Select insurers may place exclusions and limitations onto your accidental death policy. While these will differ between insurers, they generally include:
- A maximum benefit amount
- Age limitations e.g. Entry age only available between 17 and 74.
Furthermore, life insurance companies may not pay the benefit if death is caused either directly or indirectly by:
- Suicide or attempted suicide.
- Self-inflicted injury or wilful exposure to danger.
- Taking part in hazardous or professional sports.
- The direct or indirect use of alcohol or drugs.
- Participation in criminal activity.
- An act of war.
Frequently asked questions about accidental death insurance
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Who should consider this type of insurance?
Many types of life insurance policies exist. However, there are certain circumstances wherein people are not able to purchase full life cover:- Not being able to afford a full life insurance policy.
- Having a dangerous occupation, for example working with contaminants.
- Having a pre-existing medical condition or a BMI exceeding 40.
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Is accidental death life insurance worth it?
Accidents can happen at any time and to anyone. However, this type of cover is limited in offering protection to your beneficiaries in the event of your death directly from an accident within 90 days of the accident. For instance, if your death is caused due to complications other than an accident, the insurer will not pay out your benefit.
On the other hand, if you are unable to purchase full life cover due to its pricing, your occupation or medical history, then accidental cover is a good option for you. -
Does accidental death cover heart attack?
Generally, a hearts attack constitutes a natural occurrence and would not be covered. However, if a person dies of a cardiac arrest brought on by accident, a valid claim could be submitted. -
Does accidental death cover cancer?
No. Cancer is a disease caused by the abnormal division of cells in your body. Thus it does not constitute an accident. -
Does accidental death life insurance cover drug overdose?
Accidental death cover generally would not pay out a benefit if death were due to an overdose of legal or illegal drugs. Such an occurrence will fall under the exclusion of self-inflicted injury or suicide.
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I have an Insurance policy for my husband and I, but it says accidental death so if one of us had a heart attack would that mean we are not covered? Or if we died from an illness we would not be covered? Please Help ..
Thanks for your question Merrion and it is an interesting one. It is important to remember that ‘Accidental Death’ Policies do not cover death caused by illness, natural causes or an intentional act such as suicide. Accident generally refers to an unintended or unexpected event with often violent and external means which causes death within a certain time frame whilst the policy is in force. Therefore, generally a heart attack would not be covered but the insured having a heart attack as a result of an accidental injury or event occurring could be covered depending on the circumstances.
Can we get accidental death insurance for $200k that covers the accidental death of BOTH myself and my wife in the one accident. We are both aged 70. We do not need or want to be covered individually because we have state superannuation that will cover the individual needs.
Hi Gordon.
Depending on your insurer, you can generally insure yourself and your wife under one policy. Please give us a call on 1300 135 205 and an insurance specialist will assist you.