“Should I get accidental death for mortgage protection” is a question we hear occasionally. Accidental death life insurance only pays out if you die as the result of an accident. Accidental life insurance does not cover you for disease or life insurance related deaths.
In this article, we review what accidental death life insurance is, what you should look for when purchasing an accidental death policy, and when is the time to purchase accidental life insurance for mortgage protection (and most other life insurance situations).
When does accidental death pay out to my beneficiary?
Accidental death will only pay if your death results from an accident. It won’t cover deaths resulting from disease or illness. Most deaths that occur will result from diseases and illnesses.
How likely is it that I will die accidently?
Per the Center for Disease Control and Prevention (CDC), here are the top five leading causes of death (as of 2014)
- Heart disease
- Chronic lower respiratory diseases
As you can see from these numbers, heart disease, cancer, and respiratory diseases are the primary reasons people die prematurely. Of these two, heart disease and cancer are the largest causes of premature death.
When would accidental death be appropriate in mortgage protection?
We always recommend a guaranteed coverage mortgage protection life insurance as your primary policy. Guaranteed coverage will pay your beneficiaries if your death results from disease, illness, AND accidents. You want some guaranteed coverage in place that will pay no matter how you die.
If we have to work within a client’s tight budget, we will often lower the guaranteed coverage amount and include accidental death as added additional coverage. This works especially well for clients who are healthy and at lower risk for disease or illness related deaths.
Several families have income earners who make their living by driving. These would be truck drivers, taxi drivers, bus drivers, and other people who spend a lot of time on the road. With our roads getting more dangerous every day, an extra accidental policy may be appropriate for people in these occupations.
Accidental death premiums are low for face amounts up to $250,000. An accidental death policy could be an important safety net for your family should the worst happen as the result of an accident.
Accidental death life insurance is appropriate if you work in hazardous fields, such as construction and other risky occupations. Builders, roofers, people who work with electricity, and people who work near the water would all be good candidates for affordable accidental death life insurance.
What about only an accidental death policy for mortgage protection?
We only recommend an accidental death policy as a standalone mortgage protection policy if our clients don’t qualify for any other insurance or if their budget is small. If they have a medical condition or illness that excludes them from a regular mortgage protection life insurance policy, then an accidental death policy is an affordable option.
What are accidental death policy exclusions?
Here are common exclusions for accidental death policies (meaning you won’t get paid if your death results from these activities):
Insurance company example 1:
EXCLUSIONS – We will not pay the face amount if death results from the insured:
- Engaging in or attempting to commit a felony
- Engaging in an illegal occupation
- Intentionally causing a self-inflicted injury
- Committing or attempting to commit suicide, whether sane or insane
- Involvement in any period of armed conflict, whether declared or not
- Using drugs or alcohol, except for prescribed drugs taken as prescribed
- Piloting a non-commercial aircraft over 150 hours annually
- “Flying for pay” an aircraft outside of established air routes in the United States or Canada
- Involvement in motor vehicle or boat racing, hang gliding, skydiving, mountain or rock climbing, underwater diving and pro sports
- Traveling outside of the United States or Canada for over 14 days
- Operating a motor vehicle while under the influence of alcohol or drugs
Insurance company example 2:
EXCLUSIONS – Your policy pays benefits only for death resulting from injuries. We will not pay benefits for:
- Death that occurs while this policy is not in force
- Death resulting directly or indirectly from disease or bodily infirmity
- Death resulting from an act of declared or undeclared war
- Death that occurs while serving in the armed forces
- Death caused by intentionally self-inflicted injury, while sane or insane
- Death caused by an insured person’s suicide or attempted suicide, while sane or insane
- Death resulting from an insured person’s commission or attempted commission of a felony
- Death resulting from an insured person’s being intoxicated (as determined and defined by the laws of the jurisdiction in which the loss or cause of loss occurred; for the purposes of this exclusion, the laws governing the operation of motor vehicles while intoxicated will apply)
- Death resulting from an insured person’s being under the influence of any controlled substance (except for narcotics given
on the advice of a physician)
- Death resulting from a moving vehicle accident occurring while an insured person is engaged in a contest of speed, organized or not.
These policies are simple and will protect your family if you die in an accident.
How much does accidental death life insurance cost?
Depending on your age and sex, premiums can run from $8 to around $50 a month for up to $250,000 for coverage.
Should I purchase accidental death life insurance for mortgage protection?
You can often purchase accidental death life insurance within a mortgage protection or life insurance policy. The rates are affordable and don’t increase your monthly premium much.
Why would you purchase a separate mortgage protection policy and accidental death policy? If you ever want to cancel your accidental life insurance, it is much easier to do with your guaranteed life insurance and accidental life insurance as separate policies. That way, if you wanted to cut your budget, you could just drop the accidental life insurance policy and save money each month.
Accidental death life insurance should not be your first consideration for mortgage protection. Accidental death may be appropriate to include in your mortgage protection policy if your budget is tight and you cannot afford to cover your entire home mortgage balance. It is appropriate if you work in hazardous environments, such as truck driving, construction, or maintenance.
An accidental death policy may be a good fit if you have employer-provided life insurance, want some additional protection, and money is your budget tight.
Call us at (888) 760-0903 and we will help you understand if an accidental death life insurance policy is the best choice for you, your family, your budget, and your home.