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Life Insurance vs Accidental Death: Comparisons and Tips

Mar 7, 2023 | Insurance, Life Insurance

When considering your family’s future protection, life insurance vs accidental death and dismemberment insurance are two top options for a financial backup plan. Depending on the type of policy, an accidental death plan may be enough coverage for your household. Life insurance has extensive options for individuals wanting flexible monthly rates.

While both are similar in many aspects, life insurance provides more coverage. Understanding the similarities and differences between the two can help you make the most informed choice. 

Understanding Life Insurance

Life insurance is a policy that provides your beneficiaries with a financial benefit if you pass away while the policy is active. They’ll no longer have to worry about covering living expenses, outstanding mortgage payments, funeral costs, or other fees. Whether you pass away from a severe accident or natural causes, your life insurance should provide adequate coverage for your family’s needs. 

Several options are available for those interested in life insurance in Canada, such as term life insurance and whole life insurance. Term life insurance covers a set period, while whole life insurance is a permanent alternative that ends when you stop paying premiums. 

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Term Life Insurance

Term life insurance provides life insurance for a period of your life. Typically, terms are between ten and thirty years in duration. You’ll determine the ideal coverage amount for your needs, and your beneficiaries get a payout if you pass away while the policy is still active. 

Term policies are renewable or upgradeable to a permanent life insurance plan but often come with higher premium costs due to developing new medical conditions or aging. For this reason, getting term life insurance at a younger age can be wise. Applying when you’re young and healthy can help you get lower rates up front, as you’ll pose less risk to insure.

Understanding Accidental Death Insurance

Events in which accidental death or dismemberment occur, typically as a result of car accidents, are a primary cause of premature death in younger Canadians. Regarding life insurance vs. accidental death insurance, accidental death and dismemberment coverage provides similar financial assistance to you or dependents in the household if you die or become severely injured. You’ll also pay a monthly premium for this coverage. 

This type of insurance offers a lump sum payment. Accidental death policies offer less comprehensive financial benefits than life insurance.

Dismemberment Insurance

When considering whether to get life insurance vs accidental death coverage, it’s crucial to understand everything that accidental death insurance covers. Accidental death policies typically include coverage for dismemberment. Not all policies have this coverage, making understanding each plan’s inclusions instrumental.

Dismemberment occurs when you suffer an accident and can no longer work due to an injury. Dismemberment insurance provides a lump sum amount when covered accidental injuries occur. It’s possible to get combined coverage from several providers, while others require separate purchases for dismemberment benefits.

Examples of dismemberment include loss of sight or hearing, speech impairment and loss or functionality of a limb. Life insurance doesn’t cover injuries, making accidental death and dismemberment insurance a wise choice for Canadians.

Differences Between Accidental Death Insurance and Life Insurance

There are several differences between life insurance vs. accidental death insurance. Between the possible amount of coverage you can get, premium costs, requirements for eligibility, and benefit inclusions, it’s crucial to understand these differences to determine if one or both are best for you.

Coverage Amounts

Accidental death policies offer limited coverage amounts that may be suitable for individuals seeking a supplemental life insurance alternative. Because they only provide a lump sum payment, you’ll get a lower payout from accidental death insurance than life insurance. 

Life insurance amounts offer significantly higher coverage. Depending on your needs, you can get policies worth millions of dollars. Restrictions on the amount of coverage available may apply based on your income.

Policy Costs

Policy costs between life insurance vs. accidental death and dismemberment insurance differ due to the specific situations each covers. Accidental death insurance is significantly more affordable, as it covers limited causes of accidental death or severe injury. 

Life insurance policies cover deaths no matter the cause. Policyholders will have significantly higher monthly premiums. Premium costs increase with your age, health conditions, and increased insurance risk for your provider.

Eligibility Requirements

Eligibility requirements for life insurance vary greatly depending on the type of insurance policy. Term life insurance, whole life insurance, universal life insurance, and other coverage types require medical underwriting and a health questionnaire. A no-medical policy doesn’t require an examination, making it easier to get life insurance.

Accidental death and dismemberment policies have fewer eligibility requirements and don’t require medical underwriting. Securing coverage is straightforward, as applicants get automatically accepted. 

Benefit Inclusions

Regarding benefits, life insurance does not provide them if you sustain an injury. You’ll only get benefits in the event of your death before the policy’s term ends. Benefits include financial coverage for funeral expenses, daily life, and more.

Accidental death policies also cover your death, but only in accidental events. If a pre-existing condition causes your death, you won’t get an accidental death payout. If your accidental death insurance includes a dismemberment addition, you’ll also get coverage for accidental injuries.

When to Purchase Life Insurance or Accidental Death and Dismemberment Insurance

The younger you are when purchasing life insurance, the lower your premium rates will be. Healthier individuals get lower rates as they pose less risk to insurance providers. Depending on the plan type you choose, you may have the same rates throughout your life or they may increase as you age or develop health conditions.

While accidental death and dismemberment insurance isn’t as extensive as life insurance, it provides a more affordable way to protect your future. You should purchase an accidental death policy if: 

  • You have significant financial limitations
  • You cannot get life insurance

It’s possible to have life insurance and accidental death insurance simultaneously. Typically, you can get them from the same provider.

How to Get Life Insurance

It’s a more extensive process to get life insurance vs. accidental death insurance. Because you must prove you pose a low risk for insurance companies, you’ll go through the following process after finding a plan you want: 

  1. Contact a life insurance broker to aid in the process of shopping for life insurance plans.
  2. Complete a life insurance application.
  3. Have a phone interview with an insurance agent to confirm the information on your application as well as get additional information.
  4. Undergo a medical examination, if required, and disclose information regarding pre-existing conditions, past medical history, current medications, and more if the provider requires it.
  5. Wait to hear back about approval.

How to Get Accidental Death Insurance

Getting accidental death insurance is a straightforward process. It’s best to compare multiple options before making a final selection. You can request quotes from multiple providers to compare the best rates and benefits. 

Many Canadians apply for accidental death and dismemberment insurance online.

If you already have a life insurance policy and your insurance provider offers accidental death insurance, you may be able to add accidental death insurance, dismemberment insurance, or both as riders.

Related Article

Learn even more about the different types of life insurance in this article.

Alliance Income: Compare the Top Life Insurance and Accidental Death Policies in Canada

Whether you’re considering purchasing life insurance or an accidental death insurance policy, it’s wise to speak with trained insurance professionals. At Alliance Income, we help Canadians find the most suitable policy for their needs. We compare and explain life insurance plan details and can help you find the best accidental death policy. 

No matter your age, health conditions, and more, our team has the knowledge and attention to detail to ensure that you find the perfect insurance plan. We work with top insurance providers across Canada to get the best quotes. 

Look no further than Alliance Income to understand the differences between life insurance vs. accidental death insurance. Fill out our online form to get a quote on life insurance from top providers in Canada today.


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