Accidental Death Insurance
When choosing a Life Insurance policy, you might consider an option that provides cover for accidental death. In this guide, we’ll outline what standalone Accidental Death Life Insurance involves and explain how it differs from Standard Life Insurance policies. We’ll also provide information to help you decide whether Accidental Death coverage suits your financial protection strategy.
What is Accidental Death Life Insurance?
Accidental Death Life Insurance is a specific type of policy that provides coverage if the policyholder dies because of an accident. Unlike Life Cover which pays after death from any cause, an accidental death policy only pays if the death occurs under specific circumstances.
Accidental Death Life Insurance Inclusions
An accidental death policy typically covers deaths resulting from:
- Traffic accidents
- Falls or other physical injuries
- Drowning
- Accidental poisoning
- Violent crimes
- Accidental fires
- Natural disasters
Accidental Death Life Insurance Exclusions
Some causes of death are excluded from most accidental death insurance policies, such as deaths related to:
- Natural causes
- Suicide
- Illegal activities
- Influence of drugs or alcohol
- Pre-existing medical conditions
- High-risk activities/sports (unless specifically covered)
- Certain high-risk occupations
- Acts of war or military service
Differences between Accidental Death and Life Cover
Compared to accidental death insurance which NobleOak doesn’t offer, NobleOak’s Life Insurance (otherwise known as Life Cover) covers you for a wider range of potential scenarios. Life Cover pays after accidental death and death from most illnesses, diseases, and natural causes. Thanks to this more comprehensive coverage, Life Cover can deliver greater peace of mind.
Key differences include:
- Coverage scope: Life Cover covers all causes of death, while accidental death insurance has limited coverage.
- Premium costs: Accidental death policies often have lower premiums due to their restricted coverage.
- Claim likelihood: Life Cover is more likely to pay out since it covers all causes of death.
- Long-term value: Life Cover provides significantly greater protection, making it a more valuable investment in the long run.
Eligibility and application process
Accidental Death Life Insurance has a different application process compared to Life Cover.
For Accidental Death Insurance, providers ask fewer health-related questions, and the paperwork is usually minimal. This means people with some health challenges might find it easier to get approved. However, this has a trade-off: the coverage is much more limited.
Life Insurance from NobleOak involves a more comprehensive application process called ‘full underwriting’. During this process, you’ll need to provide detailed information about your health, lifestyle, and medical history.
While this might seem more complicated, it offers significant benefits:
- More accurate risk assessment means fairer pricing
- Better understanding of your specific health profile
- Potential for more personalised coverage
- Often results in greater financial protection for your loved ones
For instance, someone with a pre-existing condition might find that fully underwritten Life Cover provides better long-term value compared to a basic accidental death policy. The slightly more complex application process is a small price to pay for better financial protection and peace of mind.
Advantages of Accidental Death Life Insurance
Let’s break down the advantages of accidental death insurance:
- Lower premium costs compared to comprehensive life insurance policies
- Simpler application process with fewer health questions
- Quick approval process for most applicants
- Can complement existing life insurance coverage
- May be suitable for those who only want coverage for accidental scenarios
- Might include additional benefits like dismemberment coverage
Disadvantages of Accidental Death Life Insurance
Here, we’ll explore the main limitations of accidental death insurance:
- Restricted coverage (compared to Standard Life Insurance policies)
- Strict definitions of what constitutes an ‘accidental death’
- Claims can be complicated due to elaborate exclusion clauses
- No coverage for deaths from illness or disease
- May not be cost-effective when considering the limited coverage provided
- Might not provide adequate financial protection for families
These issues around claim payout ratios were highlighted by the Chair of ASIC James Shipton in an ASIC report in 2018. He commented that “Accidental death insurance only covers death due to some types of accidents and offers little value to consumers, with a claim’s ratio of only 16.1% over the 2015-17 financial years*.
How much does someone get from Accidental Death Life Insurance?
The payout amount from accidental death insurance varies depending on the policy terms and coverage. When considering how much life insurance pays after an accidental death occurs, it’s important to note that accidental death policies often offer lower coverage amounts than Standard Life Insurance.
At NobleOak, we don’t offer stand-alone accidental death insurance policies. Instead, we provide interim cover for accidental death at no extra cost while your Standard Life Insurance application is being assessed. This means if you suffer accidental death during the application period, we will pay the cover amount you applied for, up to a maximum of $1 million.
Award-winning Life Insurance
Accidental death insurance serves a specific purpose, but a comprehensive Standard Life Insurance policy can give you and your loved ones greater protection. NobleOak’s award-winning life insurance offers extensive coverage for accidental deaths – as well as other causes.
Start a quote today and secure your family’s financial future with confidence.
Learn more here:
*https://asic.gov.au/about-asic/news-centre/find-a-media-release/2018-releases/18-250mr-asic-s-review-of-direct-life-insurance-finds-high-cancellation-rates-and-poor-claims-outcomes/
Any financial product advice is general in nature only and does not take into account your individual circumstances, objectives, financial situation, or needs. Before acting on it, please consider the appropriateness of the information, having regard to those factors. Any third party websites or tools referred to are subject to their own terms and conditions and NobleOak Life Limited makes no representation or warranty as to any information on those websites. Persons deciding whether to acquire or continue to hold life insurance issued by NobleOak Life Limited should consider the relevant Product Disclosure Statement and Target Market Determination for the product. NobleOak Life Limited ABN 85 087 648 708 AFSL 247302.