Term Life Insurance Articles
Understanding Accidental Death Benefit Policies
2009-10-16
In general, no one wants to think about death, and almost no one wants to think about life insurance, but considering these things together may be necessary to plan ahead for your loved ones. Therefore, it's important to understand this kind of insurance, as well as some of the provisions contained in the different policies. One such provision is the accidental death benefit.
This clause is also known as double indemnity. Double indemnity simply means that the insurance company will pay double the face value of the policy in the event of the insured person's accidental death. Every insurance company defines "accidental" in a slightly different way. Most commonly it is defined as any death that does not result from natural causes. A fatal fall, a car crash, or a fire - these are all examples of accidental death. Each insurance company may also have different exclusions to the accidental death benefit. Common exclusions include death as a result of war, while under the influence of alcohol or illegal substances, and suicide.
Although it can be confusing to sort through the different types of life insurance policies offered, all policies can be split into one of two categories: term and whole life. A term life insurance policy is set for a specific term, usually a specific number of years, at the end of which the policy will expire. Rates will increase at predetermined levels as the policyholder ages. On the other hand, whole life insurance premiums are usually locked in at the same rate, guaranteed for the duration of the policyholder's life. Despite this lock-in, the premiums for this type of policy tend to be more expensive, because the cost includes not only the policy itself, but also additional savings to be invested by the insurance company. Eventually, the policyholder can cash out the savings accrued, or even borrow against them. It may take years for the policy to accrue a substantial amount of money, so permanent life insurance policyholders are usually looking at securing long-term protection for themselves. A term life insurance policy is form of short-term protection that will earn no cash value. However, it is often times viewed as the more affordable route to go for someone on a budget.
An accidental death benefit clause can be included with or attached to either type of insurance policy. Many insurance companies will let you add the accidental death clause to your existing insurance for a small increase in the cost of the premium if you didn't initially include it.
If you have life insurance through an employer, you may want to examine the policy for an accidental death clause. Having it may benefit you, and your loved ones, in the event of something unexpected.
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In general, no one wants to think about death, and almost no one wants to think about life insurance, but considering these things together may be necessary to plan ahead for your loved ones. Therefore, it's important to understand this kind of insurance, as well as some of the provisions contained in the different policies. One such provision is the accidental death benefit.
This clause is also known as double indemnity. Double indemnity simply means that the insurance company will pay double the face value of the policy in the event of the insured person's accidental death. Every insurance company defines "accidental" in a slightly different way. Most commonly it is defined as any death that does not result from natural causes. A fatal fall, a car crash, or a fire - these are all examples of accidental death. Each insurance company may also have different exclusions to the accidental death benefit. Common exclusions include death as a result of war, while under the influence of alcohol or illegal substances, and suicide.
Although it can be confusing to sort through the different types of life insurance policies offered, all policies can be split into one of two categories: term and whole life. A term life insurance policy is set for a specific term, usually a specific number of years, at the end of which the policy will expire. Rates will increase at predetermined levels as the policyholder ages. On the other hand, whole life insurance premiums are usually locked in at the same rate, guaranteed for the duration of the policyholder's life. Despite this lock-in, the premiums for this type of policy tend to be more expensive, because the cost includes not only the policy itself, but also additional savings to be invested by the insurance company. Eventually, the policyholder can cash out the savings accrued, or even borrow against them. It may take years for the policy to accrue a substantial amount of money, so permanent life insurance policyholders are usually looking at securing long-term protection for themselves. A term life insurance policy is form of short-term protection that will earn no cash value. However, it is often times viewed as the more affordable route to go for someone on a budget.
An accidental death benefit clause can be included with or attached to either type of insurance policy. Many insurance companies will let you add the accidental death clause to your existing insurance for a small increase in the cost of the premium if you didn't initially include it.
If you have life insurance through an employer, you may want to examine the policy for an accidental death clause. Having it may benefit you, and your loved ones, in the event of something unexpected.
