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Accident Insurance
ACCIDENTAL DEATH OR ACCIDENTAL DEATH AND DISMEMBERMENT?
Group A D & D policies vary in quality as much as individual policies. However there is not much you can do about it since it usually comes with the pay package. But look at it and see if your needs require upgrades. The upgrades can be purchased either individually from a life insurance broker or through credit card companies. Usually adding it to a life insurance policy as "double indemnity" is unsatisfactory as these riders often are quite restrictive, although some companies have good A D & D riders.
However you choose to upgrade your accidental death and dismemberment coverage, it is important that you be sure that the needs you have identified are being met by the contractual wordings of the plan you buy.
© Provided as a service to the clients and associates of
STEPHEN B H SMITH, CEB, CFP, PRP
YORKMINSTER INSURANCE BROKERS LIMITED
105 Dorset Street West,
Port Hope, Ontario, L1A 1G4
Tel: 905-885-4977 Tollfree: 1-800-668-1751
Fax: 905-885-2556 Mobile: 905-373-5670
sbhs@yorkminster.ca| www.yorkminster.ca
The essential issue about accident insurance is, would your family really need more to survive if you bite it accidentally than if you died after five years on a reduced disability income, having consumed a large part of your savings to re-adjust your lifestyle? Obviously not.
This means accident insurance is not a substitute for life insurance. It's often a throw-in with group insurance contracts or credit card companies. That's because it's cheap. It's cheap because the incidence of claims is much lower than for life insurance. However sometimes it makes sense.
There are two basic types. One is Accidental Death insurance. This is the one people often confuse with life insurance. They think they could only die as the result of an accident, as they are too young to die of an illness. And therefore it must be as good as. This is very wrong and it’s why accident insurance is promoted. It is of little value since the likelihood of a claim is not high.
Accidental Death and Dismemberment insurance, however, does have some value. In addition to a death benefit, it also pays portions of that death benefit (the principal amount) when various non-death-causing accidents happen to you. For example, loss of a hand and foot, loss of sight of one eye, loss of hearing, etc. This can help with the readjustment after a disastrous accident.
Just as accidental death insurance is not a substitute for life insurance, dismemberment insurance is not a substitute for disability insurance or critical illness insurance. However, like disability and critical illness insurance, there are a lot of fine points in the wordings of different plans which you should note in choosing the right policy for you. For example, do you have to lose a limb in order to collect, or just lose the use of the limb? Or eye? Or ear? What about fingers and toes? How far does dismemberment go, just limbs and extremities or would it cover the accidental rupturing of internal organs? Can the benefits be extended to other family members? Is it 24 hour coverage, worldwide, or restricted?
People who have a lot of exposure to potential accidents, such as highway commuters or vigorous outdoor types, would do well to have an A D & D policy. It also makes sense for parents of children at school and college, when the children are too young to get their own disability insurance but, for example, are subject to major sports injuries. Often accident insurance can be extended to cover family members other than the breadwinner, although usually in smaller amounts.