Imagine if you will for a moment your relatives after you die approaching your insurance company. They’re vaguely aware that you purchased a fairly large life insurance policy and they’re about to cash in. Not only will they be able to pay off your final expenses, but junior will get to go to college to get more knowledge and mamma will get to pay the house note off. If you have a term life insurance policy, everything’s going to be as it should be.

But imagine for a minute you have an accidental death and dismemberment  policy. You know, the kind which also pays out if you lose a finger, a foot or an eye (they always make it sound like that makes the policy much more valuable). When your family goes to collect their check, your agent stares blankly at them and asks, “Was the cause of death accidental?”

We know what you’re thinking. What other cause of death is there? It’s not like you contracted cancer on purpose. Of course it was an accident. Very few people die on purpose. But, in insurance terms, your death probably won’t be accidental.

Accidental death and dismemberment insurance policies offer huge death benefits for very low premium costs. So low it seems ridiculous not to buy it. But beware, the reason the insurance is so cheap is that “accident” is defined narrowly enough that the policies seldom have to pay.

Term life insurance is also fairly inexpensive. Sure, it costs more than accidental death. But that’s because it will actually pay out if you die, even if you weren’t hit by a car.

Even if you do die from an accident, you’d better do it quickly if you want your loved ones to cash in on your accidental death and dismemberment policy. Policies vary, but generally speaking the death has to be within a few months of the accident. So, don’t linger too long on life support before cashing in or your family won’t get to. Cash in, that is.

Bottom line is this. If you really think you’re likely to die an “accidental” death, fine. Take out accidental death insurance. But, know what you have. And don’t let AD&D insurance be the only kind of life coverage that you have. Take out a real life insurance policy as well, so your family won’t be faced with the prospect of finding out that your insurance coverage doesn’t cover the kind of death you suffered.

We know you’ll think you died on accident. We’re sure your family will make that case. We’re just not so sure the underwriting insurance company will define accident quite like you do.

Photo via pasukaru76