Does Term Life Insurance Cover Accidental Death?

Term life insurance will cover you in a wide range of situations, including death from a terminal illness like cancer or a sudden fatal illness like a heart attack or stroke. It will also cover you if your death is caused by almost any type of accident, as long the death occurs within the time limit of the policy’s term.

In most cases, it doesn’t matter what caused the death: car accident, fire, fall, or even murder. However, there are a few situations where the cause of death does matter. We’ll go over them below.

Term Life’s Potential Exclusions

Here are a few reasons why an accidental death claim could be reviewed or even rejected:

• An illegal activity caused the accidental death. If you die while committing a crime, the insurance company will most likely not pay the death benefit to your beneficiaries.
• Substance abuse was involved in the accidental death. If an accidental death involved substance abuse, the insurer may question whether it was accidental or perhaps suicide. This is always going to be a difficult thing to prove, which the insurer would have to do in order to contest the death benefit claim. It would depend on the insured’s medical history and whether they disclosed that substance use on the application. If they did not disclose repeated use, the insurer would have grounds to contest the death benefit. However, if the insured person accidentally overdoses on a drug they were prescribed by their physician, this would be covered in most cases.
• A high-risk activity caused the accidental death. This is especially applicable if you regularly participate in a high-risk activity or job and did not disclose it on your life insurance application. Insurers ask if you participate in things like auto racing, skydiving, base jumping, cliff diving, scuba diving, or other activities judged to be high-risk. They also need to know if your job entails high-risk activities like working on an offshore oil rig, flying, or fighting fires. If you answer yes, the insurer may not offer you coverage, or may charge you a higher rate. Read your contract to see if there’s an exclusion clause for death that occurs due to an accident while performing a high-risk activity. It’s all going to depend on your specific insurer and policy.

Term Life’s Potential Exclusions

Here are a few reasons why an accidental death claim could be reviewed or even rejected:

• An illegal activity caused the accidental death. If you die while committing a crime, the insurance company will most likely not pay the death benefit to your beneficiaries.
• Substance abuse was involved in the accidental death. If an accidental death involved substance abuse, the insurer may question whether it was accidental or perhaps suicide. This is always going to be a difficult thing to prove, which the insurer would have to do in order to contest the death benefit claim. It would depend on the insured’s medical history and whether they disclosed that substance use on the application. If they did not disclose repeated use, the insurer would have grounds to contest the death benefit. However, if the insured person accidentally overdoses on a drug they were prescribed by their physician, this would be covered in most cases.
• A high-risk activity caused the accidental death. This is especially applicable if you regularly participate in a high-risk activity or job and did not disclose it on your life insurance application. Insurers ask if you participate in things like auto racing, skydiving, base jumping, cliff diving, scuba diving, or other activities judged to be high-risk. They also need to know if your job entails high-risk activities like working on an offshore oil rig, flying, or fighting fires. If you answer yes, the insurer may not offer you coverage, or may charge you a higher rate. Read your contract to see if there’s an exclusion clause for death that occurs due to an accident while performing a high-risk activity. It’s all going to depend on your specific insurer and policy.

If you’re worried about exclusions or types of accidents covered, get in touch with your life insurance agent. They can help you interpret your contract (if you already have a policy) or analyze the contract of any policy you’re thinking of buying so you know what’s covered in the future.

There’s a reason it’s hard to answer the question, “Does term life insurance cover accidental death?” That’s because, with life insurance, the answer is usually, “It depends.” We’re here to give you the right answer based on your specific situation. Call us and let us help. Or click the button below to get started with a free quote!

Term Life: Contestability Period

Although term life covers you for all natural and almost all accidental causes of death, most policies come with an initial 2-year contestability period. This means that, if the policyholder dies within that period, the insurance company has the right to investigate the circumstances of that death.

What are they looking for? They want to know what caused the death, and if that cause of death indicates the insured lied on their application. Lying on the application can invalidate the insurance contract, meaning the insurer doesn’t have the pay the death benefit. Overall, however, according to the Insurance Information Institute, only 0.6% of average annual claims are contested.

This is particularly relevant if the death may have been a suicide. Most insurers will cover death by suicide only after that initial contestability period. Check your policy documents for details.

In terms of accidental death, this will only apply if the accident happened during an activity the insured failed to disclose on their application. This might be a high-risk activity, or it might be due to travel to a high-risk country (a question all insurers ask on the application). That’s why it’s so important to be 100% truthful on your application.

There’s a reason it’s hard to answer the question, “Does term life insurance cover accidental death?” That’s because, with life insurance, the answer is usually, “It depends.” We’re here to give you the right answer based on your specific situation. Call us and let us help. Or click the button below to get started with a free quote!

Term Life vs. Accidental Death & Dismemberment (AD&D) Coverage

Accidental death is also covered under a different policy type, called accidental death & dismemberment. This policy pays out when you are killed or gravely injured by an accident. You can buy these either as stand-alone policies or as a rider on your life policy. The injury types covered include paralysis, blindness, or losing a limb.

With a stand-alone policy, it doesn’t usually matter how the accident occurred, as long as the end result is serious enough to qualify you for a payout. It could be a car accident, a fall from a ladder, or a workplace accident. As with term life, certain types of accidents will be disqualified if they were caused by unsafe or illegal activities ranging from drug use to suicide attempts. Every insurer will have its own list of disqualifying activities.

With an AD&D rider on your term life policy, the insurance company will pay out additional funds if you die due to a covered accident. Usually, they’ll double the amount of your death benefit. If you survive the injury, the insurer will still pay you, but not the full amount of your death benefit.

Some insurers will include this rider on your policy for free, while others will charge extra if you want it. Is it worth adding this on if it costs extra? That’s up to you. Some riders have very specific language regarding the types of covered accidents, or limit the length of time between the accident and death in order for your beneficiaries to receive the extra payout. Read the fine print and talk to your insurance agent to make sure you understand what you’re buying.

There’s a reason it’s hard to answer the question, “Does term life insurance cover accidental death?” That’s because, with life insurance, the answer is usually, “It depends.” We’re here to give you the right answer based on your specific situation. Call us and let us help. Or click the button below to get started with a free quote!