What is accidental death insurance in Canada? How does it work?
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Discover the methodologyAccidental death insurance gives your family financial protection if you pass away unexpectedly due to an accident. It's your assurance that your loved ones will be cared for in times of need even in the worst circumstances.
But what does accidental death insurance cover? How do you find the right policy? What does it cost? We've got you covered.
Read our comprehensive guide to understand how accidental death insurance works, its pros and cons, and how to buy a policy. You can also use our free comparator to compare the best plans in the market and get free insurance quotes in seconds.
Accidental Death Insurance in Canada: Key Points
- Accidental death insurance offers financial protection for unexpected accidents.
- It complements traditional life insurance but has specific accident coverage.
- Costs are budget-friendly, often starting at $5–$15 per month in Canada.
- Cost varies by provider and policy, and is often affordable as a rider.
- It is also commonly known as AD&D insurance.
- It is ideal for extra protection if you work or travel in high-risk situations.
What is accidental death insurance?
Accidental death insurance is a type of policy that pays money to your family if you die unexpectedly in an accident, like a car crash or a workplace injury. It’s not the same as regular life insurance because it only covers deaths caused by accidents, not illnesses or natural causes.
If you’re in a car accident and pass away, your family will receive the payout. However, if you pass away from a medical condition like a heart attack, this policy won’t provide coverage. It’s a simple, affordable way to add extra financial protection.
It is also commonly referred to as AD & D Insurance or Accidental Death and Dismemberment Insurance.
Good to know
Dismemberment is legally defined as the complete severance of one arm or one leg at or above the wrist or ankle joint, or the complete and irrecoverable loss of the sight of one eye.
Accidental death insurance is usually sold as an add-on to an existing life insurance policy. It should not be used as a replacement for life insurance. If you do not have a life policy in place, consider proceeding with that before buying an accidental death policy.
However, finding the right policy is no mean task and you must look at multiple options before deciding on one. Worry not, we've made it simple for you. You can use our comparator below to compare the best life insurance policies in Canada with accidental death insurance based on your needs and get free quotes in seconds.
Compare the best life insurance companies
What does accidental death insurance cover?
While the coverage varies from one provider to another, here is what AD & D Insurance typically covers and doesn't:
| What Accidental Death Insurance Covers | What Accidental Death Insurance Does Not Cover |
|---|---|
| Death from car accidents | Death from illnesses (e.g., cancer, heart attack) |
| Workplace accidents leading to death | Death from natural causes (e.g., old age) |
| Falls or slips resulting in accidental death | Suicide or self-inflicted injuries |
| Accidental drowning | Death while engaging in risky activities excluded in the policy (e.g., extreme sports) |
| Accidental deaths during travel (e.g., plane crashes) | Death from drug or alcohol abuse |
| Death caused by fires or explosions | Homicide (if not classified as accidental) |
Different companies have different terminology when it comes to AD & D Insurance. You can take a look at Canada's best life insurance companies in our guide to understand how coverage works.
You can also compare the coverages offered by various providers for accidental death right here in detail. Simply use our free comparator below and compare multiple plans and get quotes in seconds.
Compare the best life insurance companies
How much does accidental death insurance cost?
Accidental death coverage is usually a rider on a life policy. Let's take a look at some of the rates from leading providers for a 33-year-old individual with no dependents for $100,000 of coverage:
| Provider | Cost of accidental death plans |
|---|---|
| BMO Accidental Death Benefit Insurance | $9.47/month |
| CIBC Accidental Death Insurance | $8.50/month |
| Scotiabank Accidental Death Insurance | $16.62/month |
| TD Accidental Death Insurance | $10/month |
What is accidental death insurance payout?
An accidental death insurance payout, also known as a death benefit, is a lump-sum payment provided to the beneficiary or beneficiaries of an insured individual if the insured person dies as a direct result of an accident covered by the policy. The payout is typically a fixed amount specified in the insurance policy and is not dependent on factors like the insured person's age, health, or medical history.
What are the advantages and disadvantages of Accidental Death Insurance?
Pros of Accidental Death Insurance in Canada
- Affordable option for budget-conscious individuals.
- Quick payout for covered accidental deaths.
- Additional benefits for dismemberment and serious injuries.
- No medical exam or extensive underwriting required.
Cons of accidental death insurance
- Coverage excludes natural causes and illnesses.
- Specific exclusions may restrict eligibility for payouts.
- Lower payouts than traditional life insurance.
- No cash value or savings component.
Who offers the best accidental death insurance in Canada?
Several major insurance providers in Canada offer accidental death insurance policies. Here's an overview of their offerings:
1. Sun Life: Sun Life Go Accidental Death Insurance
- Coverage: Sun Life Insurance company provides a tax-free lump-sum payment to beneficiaries if the insured dies due to an accident. Coverage amounts range from $25,000 to $500,000, available in units of $25,000.
- Eligibility: Canadian residents aged 18 to 65.
- Key Features: Guaranteed acceptance without medical questions; coverage continues until age 70, provided premiums are paid.
2. TD Insurance: TD Accidental Death Insurance Plan
- Coverage: TD Life Insurance company offers a tax-free lump-sum payment between $50,000 and $250,000 for accidental death. Benefits double up to $500,000 if the death occurs while traveling on a common carrier, such as an airplane.
- Eligibility: TD customers who are Canadian residents aged 18 to 65.
- Key Features: Guaranteed acceptance with no medical or health questions; premiums start from $5.00 per month plus tax; includes a daily hospital indemnity benefit up to a total of $18,250.
3. CIBC: CIBC Accident Protection Plan
- Coverage: CIBC Life Insurance company provides accidental death coverage in amounts ranging from $25,000 to $200,000.
- Eligibility: Canadian residents aged 18 to 64.
- Key Features: No medical exams or health questions required; option to add a spouse with the same coverage amount at a discounted rate; includes an annual bonus benefit that increases coverage by 1% each year.
4. BMO Insurance: Accidental Death Benefit Insurance
- Coverage: BMO Insurance offers coverage amounts up to $250,000 for accidental death.
- Eligibility: Details not specified; typically available to Canadian residents.
- Key Features: Direct-to-consumer offering with four coverage levels; no medical exam required.
5. Manulife: Accidental Death and Dismemberment Insurance
- Coverage: Manulife insurance provides benefits for accidental death and dismemberment, including loss of limbs, sight, or paralysis.
- Eligibility: Details not specified; generally available to Canadian residents.
- Key Features: Offers a percentage of the coverage amount based on the type of loss; includes coverage for paralysis and other severe injuries.
6. AIG: Basic Accidental Death and Dismemberment Insurance
- Coverage: Provides worldwide 24/7 coverage for accidental death and dismemberment.
- Eligibility: Typically offered through employers as a group benefit.
- Key Features: Customizable coverage options; can be integrated with existing group life insurance programs.
Is accidental death insurance worth it?
The answer to this question depends on your circumstances. Do you live a life that puts you at heightened risk of having a serious accident? In 2018 just 6% of all annual deaths in Canada were due to injury and poisoning. Of that 6%, nearly a fifth were as a result of opioid overdoses, something specifically excluded by every accidental death policy.
Accidental death protection is relatively cheap compared to term life because the odds are that you will probably not collect on it. On the other hand, you may have a job or a lifestyle that puts you at a level of risk above the national average. Let's take some examples:
For example
- Tyson, 24, is a website designer who lives with his partner in Vancouver. He loves city life and is happiest at the weekend in wine with friends or at the cinema. Tyson is therefore low-risk and would be better served by purchasing traditional life insurance.
- By contrast, Emmeline, 30, drives a log truck on Quadra Island, BC. She works long hours in a tough environment and likes to go hiking on her own in her free time. Logging is Canada's most dangerous industry with a recent study showing that 2.8% of the workforce is killed or injured every year.
Emmeline should also have traditional life insurance, but for her, it would make sense to add an accidental death and dismemberment rider.
How to get the best accidental death insurance policy?
- Research Providers: Start by researching companies in Canada that offer accidental death coverage policies. Consider their reputation, customer reviews, and financial strength.
- Compare Policies: Compare multiple AD&D insurance policies to understand their coverage, exclusions, and costs. Look for policies that align with your specific needs.
- Evaluate Premiums: Assess the premium costs for each policy. Ensure it fits your budget while providing adequate coverage.
- Understand Exclusions: Pay close attention to policy exclusions. Be aware of any circumstances or activities not covered by the policy.
- Consult an Agent: Consider consulting with an insurance agent or broker who can provide personalized advice and help you find the best accidental death insurance policy that meets your requirements in Canada.
While the aforementioned steps could seem like a time-consuming process, we've made it simple for you. You can use our free comparator below to compare the best life insurance plans with accidental death insurance coverage and get personalized quotes in seconds.
Compare the best life insurance companies
Does life insurance cover accidental death?
Yes, life insurance in Canada typically covers accidental death, along with death from natural causes like illness or aging. If you have a standard policy and pass away in an accident, your life insurance beneficiaries will still receive the payout. However, some policies may exclude certain high-risk activities, like extreme sports, so it’s important to check the fine print.
For example
If you have a life insurance policy worth $500,000 and die in a car accident, your family will receive the full payout. If you also have an accidental death rider or separate accidental death insurance, they may receive an additional benefit. For instance, the accidental death coverage might add another $500,000, providing a total payout of $1,000,000 to your loved ones. This can be especially helpful for families who depend on your income.
For clarity, review your policy or speak to your life insurance company to fully understand the coverage.
But what is the difference between life insurance and accidental death insurance?
The crucial difference between the two is that a life policy only pays out when you die, whereas accidental death pays out in case of a serious, mutilating accident. An accidental death insurance policy cannot replace traditional life policies. However, it can be an interesting add-on.
However accidental death does not pay out if you are disabled as a result of illness. Also, as we have seen, many exclusions might prevent a benefit from being triggered, including the legality of your actions, the intentionality of your actions, and your state of intoxication.
Do I need AD & D Insurance?
If you are working in a high-risk industry, like login or fishing then it may make sense to have Accidental Death and Dismemberment Insurance as an add-on. For more generalized coverage, it probably makes sense to combine a term life insurance policy with critical illness insurance or long-term disability insurance.
FAQs on Accidental Death Insurance in Canada
Accidental death insurance provides financial protection by paying a lump sum to your family if you pass away due to an accident, like a car crash or a fall.
Yes, life insurance covers accidental death along with natural causes, but accidental death insurance focuses solely on accidents and may provide an extra payout.
Notify the insurer, complete a claim form, and provide proof of the accident and a certified death certificate to process the payout.
It covers deaths caused by accidents such as car crashes, slips and falls, workplace injuries, or drowning. Illnesses and natural causes are not covered.
It’s worth considering if you want affordable extra coverage, especially if you work in high-risk environments or travel frequently.
Life insurance covers all causes of death (except exclusions), while accidental death insurance only pays for deaths caused by accidents.
