What is Accidental Death Insurance? A 2024 Guide
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Accidental death insurance becomes your safety net, shielding your family from financial hardship during unforeseen crises. It's your assurance that, in times of need, your loved ones will be cared for 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 you can 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: 5 key takeaways
- Accidental death insurance offers financial protection for unexpected accidents.
- It complements traditional life insurance but has specific accident coverage.
- Exclusions exist; payouts are for specific, sudden, unforeseen accidents.
- Cost varies by provider and policy; often affordable as a rider.
- Consider lifestyle and risk factors when deciding on coverage.
What is accidental death insurance?
Accidental death insurance is sometimes known as accidental death and dismemberment insurance. This is because as well as covering you in case of death by accident, many policies also cover serious injury such as the loss of a limb.
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 need to 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.
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What is international accidental death insurance?
International accidental death insurance provides coverage for accidental death or dismemberment that occurs while the insured individual is traveling or residing outside their home country. This insurance is designed to offer financial protection in the event of a fatal accident or a significant injury resulting in dismemberment, paralysis, or loss of sight, hearing, or limbs while abroad.
Pros of accidental death insurance
- 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.
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 in the event that 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.
Who offers accidental death insurance Canada plans?
Most major companies in the industry offer accidental death coverage as an add-on under slightly different names. Providers include including:
| Provider | Policy name |
|---|---|
| AIG | Accidental Death and Dismemberment Insurance |
| AMA | Alberta Medical Association's Accidental Death & Dismemberment (AD&D) Insurance |
| BMO | BMO Accidental Death Benefit Insurance (also commonly referred to as BMO Accidental Death Insurance) |
| CIBC | CIBC Accident Protection Plan (also commonly referred to as CIBC Accidental Death Insurance) |
| Manulife | Accident Insurance |
| Scotia | Scotiabank Accidental Death Insurance |
| Sun Life | Sun Life Go Accidental Death Insurance |
| TD | TD Accidental Death Insurance |
What does accidental death insurance cover?
So you're probably wondering what is considered accidental death for insurance purposes. The definition of what is considered accidental death can be a bit tricky and policies tend to have a long list of exclusions and qualifications. Let's take a look at the conditions and definitions of a sample policy from TD's life Insurance.
Firstly, an 'accident' is defined as being "sustained directly and independently from all other causes". This means, for instance, that if a policyholder died or was seriously disabled by a disease they would not be eligible for a pay-out. In this case, you would be better served by purchasing critical illness or long-term disability insurance.
| Term | Definition |
|---|---|
| Critical Illness | Acute heart attack, life-threatening cancer, stroke |
| Death | Suicides and deaths that happen while committing a crime are not covered |
| Loss of arm | Arm lost from wrist up |
| Loss of leg | Leg lost from ankle up |
| Quadriplegia | Total severe of spinal cord |
| Loss of sight | Total loss of sight in both eyes |
You can 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
What does accidental death insurance not cover?
The following are excluded from coverage by an accidental death and dismemberment coverage policy:
- suicide and self-mutilation
- death or dismemberment that happens while committing a crime
- accidents due to intoxication
- accidents occurring during a normal pregnancy
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 | $9.47/month |
| CIBC | $8.50/month |
| Scotia | $16.62/month |
| TD | $10/month |
Is accidental death insurance worth it?
The answer to this question depends on your individual 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
How to compare accidental death insurance vs life insurance?
An accidental death insurance policy cannot replace traditional life policies. However, it can be an interesting add-on. 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.
However accidental death does not pay out if you are disabled as a result of illness. Also, as we have seen, there are many exclusions that might prevent a benefit from being triggered, including the legality of your actions, the intentionality of your actions, and your state of intoxication.
If you are working in a high-risk industry, like login or fishing then it may make sense 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.
