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Although it can be uncomfortable to think about, planning how your loved ones will fare if something were to happen to you warrants careful consideration, especially if you’re looking to aid your family financially after your death.

Accidental death insurance is a life insurance product specifically designed for these circumstances.

What is accidental death insurance?

Accidental death insurance could pay a lump sum benefit to the policyholder’s nominated beneficiary or estate if they were to pass away due to an accident. This is similar to life cover; however, the benefit will only be paid if the cause of death is considered an accident.

What does accidental death insurance cover?

Depending on your policy, accidental death insurance is likely to cover unexpected and unpredicted events, like death as a result of drowning or a car accident. Many insurers will pay claims for accidents that result in death after 90 days of the incident occurring.

For some policies, you can include cover for your children as an add-on to your own accidental death insurance policy. On top of this, some policies feature 24-hour worldwide cover as well, which can be particularly helpful if you’re travelling overseas.

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What is considered accidental death for insurance purposes?

Life insurance companies generally define accidental death as one that results from an unexpected and unintentional, violent, external and visible circumstance. This circumstance must be separate from any other cause; that is, the accidental death cannot be related to any pre-existing issues, like those relating to your physical or mental health.

How insurers define accidental death is important, as this definition will affect when you are or aren’t covered should you pass away in an accident. The exact definition can vary between insurers, so it’s a good idea to always check the relevant Product Disclosure Statement (PDS) when taking out cover.

What are some exclusions in accidental death insurance?

Before taking out accidental death insurance, it’s vital you understand what some of the exclusions are – otherwise, your loved ones may be unable to make a claim on certain, uninsured events.

Typical policy exclusions may be death caused by:

  • Illnesses
  • Cancer
  • Heart attack
  • Suicide
  • An accident that is caused by the insured’s deliberate act or intention
  • Infectious diseases
  • Adventure sports that you participate in regularly, like scuba diving, recreational aviation and motor racing
  • Misuse of alcohol or drugs
  • Illegal acts
  • Acts of war, either formally declared or otherwise, including hostilities and civil commotion
  • Professional sports.

When applying for your policy, make sure you answer your insurer’s questions honestly, as your claim could be declined if you failed to disclose something your insurer asked for.

Furthermore, accidental death benefits may not be payable if your death occurs after a certain amount of time has elapsed following the accident

What is the difference between life insurance and accidental death insurance?

Life insurance (also known as term life insurance) policies are typically more expensive than accidental death insurance policies, as they generally provide benefit payouts for a wider range of causes of death or, in some cases, if you’re diagnosed with a terminal illness.

On the other hand, stand-alone accidental death insurance provides a lump sum payment to your beneficiaries for deaths arising from an accident as defined by the insurer. This is why accidental death insurance premiums are typically cheaper, and the cover is more basic.

Is accidental death insurance really worth it?

While many of us do our best to stay safe, the unknown is largely out of our control, particularly on the road. Accidental death insurance offers peace of mind knowing that if you’re caught up in the unexpected, your loved ones could be aided with financial support.

Depending on the policy, you can expect guaranteed acceptance for accidental death insurance, with a benefit amount of up to $1,000,000. Some policies can offer protection up until you turn 99.

Frequently Asked Questions

Does the payout reduce as I age?

Generally, the benefit payable on your accidental death insurance will not reduce as you age. If you’re eligible, you may be able to increase your benefit to a justifiable amount. On top of this, payouts typically increase in line with the Consumer Price Index (CPI) each year.

Policies can also include guaranteed insurability, where you can increase your sum insured to suit personal life events, like marriage and having children.

Does accidental death insurance cover heart attacks?

Accidental death insurance does not cover heart attacks if they occur naturally. However, if a heart attack arises from an accident (e.g. a minor car accident causes the attack), it is possible that the insurer may provide cover.

Does term life insurance cover accidental death?

Accidental death insurance is typically a standard feature in comprehensive life insurance policies. Term life insurance policies pay a lump sum in the event of death or terminal illness, so these policies usually pay for accidental death in addition to a range of other deaths, like those arising from a pre-existing condition. As it’s a more comprehensive level of life cover, term life insurance premiums can be more expensive than premiums for stand-alone accidental death policies.

However, many prefer to bundle it with other life insurance products to increase value for money, and to increase cover for all kinds of situations.

What should I be aware of when taking out accidental death insurance?

It’s important you know that accidental death insurance may not provide all the cover you need for your circumstances. For example, if you pass away because of a pre-existing condition or an illness, your beneficiary will not receive a benefit. Some life insurers offer cover for different types of death, but this will generally cost more than a policy that only covers accidental death.

Who can take out accidental death insurance?

Generally, most Australian or New Zealand citizens and permanent residents aged 18 to 74 can take out accidental death insurance. Aside from this, there are usually few restrictions on who can take out this type of policy.

Your next step in choosing the right life insurance policy

When it comes to life insurance, it’s important that you choose the policy that provides the right level of cover to suit your needs, budget and lifestyle.

To help you take the first steps, try our helpful life insurance calculator. Simply enter information about your lifestyle, and we’ll offer a guide to the minimum amount of cover you might want to consider in a policy.

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