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Life Term Insurance vs Accidental Death Insurance Policy

Life term insurance and accidental death insurance are two different types of insurance policies that provide coverage. While both policies offer financial protection, they differ in terms of coverage and the circumstances in which they pay out.

  • 12,165 Views | Updated on: Apr 24, 2024

Life term insurance and accidental death insurance are two different types of insurance policies that provide coverage. While both policies offer financial protection, they differ in terms of coverage and the circumstances in which they pay out.

When it comes to protecting your loved ones and securing their financial future, insurance policies play a vital role. Among the various types of insurance coverage available, two common options that provide financial security in the event of an unexpected tragedy are life-term insurance and accidental death insurance policies. These policies differ in their coverage, purpose, and the circumstances under which they provide benefits.

Key takeaways

  • An accidental death policy may be easier to qualify for because there is no medical exam required, and you can usually receive coverage faster than a regular life policy.
  • The primary distinction between term life and accidental death insurance is that an accidental death policy only pays out for accidental death or dismemberment, whereas a term life policy pays out regardless of the cause of death.
  • Another difference between life insurance vs accidental death insurance is the availability of options.
  • If you want to include covers like partial loss of sight or limb under a regular life plan, you need to pay an extra premium to avail of riders. In comparison, an accident plan provides such benefits without any additional cost.

While both life-term insurance and accidental death insurance policies offer valuable financial protection, they serve different purposes. Life term insurance provides broader coverage, encompassing deaths from any cause, whether accidental or due to natural causes, throughout the policy term. It offers a more comprehensive solution for long-term financial planning, ensuring that the insured’s beneficiaries are financially supported in various circumstances. In contrast, accidental death insurance policies provide more limited coverage, focusing solely on accidents as the cause of death.

What is Life Insurance?

Life insurance is a financial tool designed to provide protection and financial security for individuals and their loved ones in the event of the policyholder’s death. It offers a way to ensure that dependents and beneficiaries are taken care of financially, even when the policyholder is no longer there.

Life insurance policies come in various forms, but the basic concept remains the same, the policyholder pays regular premiums, and in return, the company agrees to pay out a predetermined sum of money. This is known as the death benefit to the beneficiaries upon the insured person’s death.

Also Read: What is Life Insurance?

What is Accidental Death Insurance?

An accidental death insurance policy offers protection to you and your family in case of severe injuries or death in an accident. Policy benefits are available in case of loss of limb or vision or if you get paralyzed in an accident. These plans do not provide cover for high-risk adventure activities such as motor racing and skydiving.

What Does Life Insurance Cover?

Life insurance offers financial protection and peace of mind by paying out a sum of money, known as the death benefit, to your designated beneficiaries. This benefit can be used to cover various expenses and financial obligations that may arise after the policyholder’s demise. While the specific details of life insurance coverage can vary depending on the policy, there are some common aspects that most life insurance policies cover.

Debt Repayment

Life insurance can be used to pay off outstanding debts and financial obligations you may leave behind. It can help cover mortgage payments, credit card debts, personal loans, car loans, and other debts that would otherwise burden your family. By relieving your loved ones of these financial responsibilities, life insurance ensures they can maintain their quality of life without struggling to make ends meet.

Income Replacement

If you are the major breadwinner in your family, life insurance can compensate for lost earnings. The death benefit can provide a financial cushion to your dependents, enabling them to cover daily living expenses, such as housing costs, utility bills, education expenses, and other necessities. It helps maintain their standard of living and provides financial stability during a challenging time.

Education Expenses

Parents consider their children’s education a top priority. Life insurance can help fulfill this goal by covering educational expenses, such as college tuition fees, school fees, and other related costs. By having life insurance, you can ensure that your children’s educational aspirations are not compromised due to financial constraints.

Estate Taxes

In some cases, life insurance can be used to cover estate taxes that may arise upon your death. Depending on the value of your estate, your beneficiaries may be required to pay a certain percentage of estate taxes. Life insurance proceeds can be used to settle these taxes, preventing the need to liquidate assets or deplete your estate.

What Does Accident Death Insurance Cover?

Accidents can happen unexpectedly, often resulting in physical injuries and financial burdens. To mitigate the financial risks associated with accidents, many individuals opt for Accident Death (AD) insurance. AD insurance provides coverage for a wide range of incidents that can lead to injuries or disabilities. We will now delve into the specifics of AD insurance and explore what it covers.

Medical Expenses

One of the primary aspects of AD insurance coverage is the reimbursement of medical expenses resulting from accidents. This includes hospitalization costs, surgical procedures, diagnostic tests, medication, and rehabilitation services. Whether it is a minor injury or a severe accident, AD insurance can provide financial support by covering these medical expenses, relieving the policyholder from the burden of hefty bills.

Disability Income

In the unfortunate event of a disability caused by an accident, AD insurance can provide a regular income to replace lost wages. This feature is especially crucial for individuals who rely on their income to support themselves and their families. The disability income provided by AD insurance ensures that individuals can maintain their financial stability even if they are unable to work temporarily or permanently due to an accident-related disability.

Accidental Death Benefits

In the event of a fatal accident, AD insurance can provide a lump sum payment to the designated beneficiaries. This serves as financial protection for the policyholder’s family and loved ones, helping them cope with the sudden loss and any associated financial burdens. Accidental death benefits can be used to cover funeral expenses, outstanding debts, mortgage payments, and other immediate financial needs.

Dismemberment and Loss of Function

AD insurance can also cover dismemberment or loss of certain bodily functions resulting from an accident. If the policyholder experiences the loss of a limb, sight, or hearing or suffers permanent paralysis due to an accident, the insurance policy can provide compensation to help adapt to the new circumstances. This can involve covering the costs of prosthetic limbs, assistive devices, home modifications, and rehabilitation services.

Additional Coverage Options

Depending on the policy and insurance provider, AD insurance can also offer additional coverage options. These can include coverage for accidental injuries sustained while traveling, coverage for accidents occurring during specific activities such as sports or adventure pursuits, and coverage for accidents resulting from acts of terrorism or acts of war. It is essential to carefully review the policy terms and conditions to understand the scope of coverage provided.

What is not Covered in Life Insurance?

There are certain exclusions and limitations that policyholders should be aware of to make informed decisions about their coverage. Understanding these exclusions will enable individuals to make comprehensive and well-rounded financial arrangements for themselves and their loved ones. So, let us delve into the aspects that fall outside the scope of life insurance coverage.

Suicide within the Contestability Period

Most life insurance policies have a contestability period, usually the first two years after the policy goes into effect. If the insured person dies by suicide during this period, the insurance company may not pay the death benefit. However, after the contestability period expires, suicide is typically covered.

Pre-Existing Medical Conditions

When applying for life insurance, the insurance company assesses your health and medical history. If you have pre-existing medical conditions, such as certain chronic illnesses or terminal diseases, the insurer may either deny coverage or charge higher premiums. In some cases, they may exclude coverage for the specific condition altogether.

Dangerous Activities and Occupations

If you engage in high-risk activities like extreme sports, skydiving, or professional racing, or if you work in hazardous occupations such as mining, logging, or offshore oil drilling, the insurance company may exclude coverage for accidents or deaths resulting from these activities or occupations. Alternatively, they may offer coverage with higher premiums to account for the increased risk.

Misrepresentation or Fraud

If the insured person provided false information or withheld important details during the application process, the insurance company may deny the death benefit payout. It is crucial to be truthful and transparent when disclosing personal and medical information to ensure that your beneficiaries receive the intended coverage.

Non-Payment of Premiums

Life insurance requires regular premium payments to remain in force. If the policyholder fails to pay the premiums within the grace period specified in the policy, the coverage may lapse, and the insurance company will not pay the death benefit if the insured person passes away after the policy has lapsed.

Acts of Self-Harm or Illegal Activities

Life insurance policies typically exclude coverage for deaths resulting from acts of self-harm, such as suicide or illegal activities. If the insured person dies due to their involvement in illegal acts or intentionally causing harm to themselves, the insurance company will not provide the death benefit.

What is not Covered by Accidental Death Insurance?

While accidental death insurance can provide valuable protection for individuals and their families, it is important to understand what is not covered by accidental death insurance. Knowing the limitations of this type of policy can help individuals make informed decisions about their insurance needs and explore additional coverage options if necessary.

Natural Causes

Accidental death insurance specifically covers death resulting from accidents and not from natural causes or illness. This means that if an insured individual passes away due to a medical condition, such as heart disease, cancer, or a stroke, the policy will not provide a death benefit. It is crucial to have separate life insurance coverage to address such situations.

Intentional Self-inflicted Injuries

Accidental death insurance generally excludes coverage for deaths resulting from intentional self-inflicted injuries. The purpose of this exclusion is to prevent individuals from taking advantage of the policy by intentionally causing harm to themselves.

Certain High-risk Activities

Some high-risk activities may not be covered by accidental death insurance or may have specific limitations and exclusions. These activities can include extreme sports like skydiving, bungee jumping, rock climbing, and racing motor vehicles. If an individual frequently participates in such activities, it is essential to review the policy’s terms and conditions to understand the coverage limitations.

War and Acts of Terrorism

Accidental death insurance may exclude coverage for deaths caused by war, acts of terrorism, or military service-related incidents. These types of events often fall under specialized insurance policies, such as war risk insurance or terrorism insurance, which provide coverage specific to these situations.

Drug and Alcohol-related Incidents

If an insured individual’s death results from drug or alcohol abuse, accidental death insurance may not provide coverage. Insurance companies may exclude deaths caused by the influence of illegal substances or excessive consumption of alcohol.

Pre-existing Conditions

Accidental death insurance policies typically do not cover deaths resulting from pre-existing medical conditions. If an individual has a known medical condition at the time of obtaining the policy and subsequently passes away due to it, the insurer may deny the claim.

Aviation-related Incidents

Accidental death insurance may have limitations when it comes to aviation-related incidents. While coverage for commercial air travel is generally included, some policies may exclude private or recreational aviation activities. It is crucial to carefully review the policy’s terms and conditions to determine the extent of coverage for aviation-related incidents.

Why do You Need to Have Life Insurance?

Life is uncertain, and while we cannot predict what lies ahead, we can take steps to safeguard the financial well-being of our loved ones. This is where life insurance comes into the picture. Life insurance is a crucial financial tool that provides a safety net for your family and loved ones in the event of your untimely demise. It offers a sense of security by ensuring that your dependents are financially protected and can maintain their standard of living even after you’re no longer around.

Protecting Your Loved Ones

The primary purpose of life insurance is to provide financial protection for your loved ones in the event of your untimely death. Life insurance ensures that your family members or dependents will be taken care of financially, even when you are no longer around to provide for them. It can help cover immediate expenses, such as funeral costs, outstanding debts, mortgages, education expenses, and daily living expenses. The death benefit from a life insurance policy can be a lifeline for your family during a difficult time, helping them maintain their standard of living and secure their future.

Income Replacement

If you are the primary breadwinner in your family, life insurance is essential to replace your income after you are gone. It ensures that your family can continue to meet their financial obligations, such as paying bills, maintaining the household, and covering day-to-day expenses. Life insurance can provide a steady stream of income to replace the loss of your salary and ensure that your loved ones are not burdened with financial hardships.

Debt and Estate Planning

Life insurance can play a vital role in debt and estate planning. In the unfortunate event of your passing, your debts do not disappear. They can become a significant burden for your family to bear. Life insurance can help cover outstanding debts, such as mortgages, personal loans, or credit card debts, preventing your loved ones from inheriting these financial obligations. Additionally, life insurance can be used to pay estate taxes, ensuring that your estate can be passed on to your heirs without any financial strain.

Business Continuity

If you are a business owner, life insurance becomes even more critical. It can ensure the continuity and financial stability of your business in the event of your death. Life insurance proceeds can be used to fund a buy-sell agreement, allowing your business partner(s) to buy out your share from your family and maintain the business’s operations. It can also provide the necessary capital to hire and train a replacement, pay off business debts, or cover any financial obligations that may arise due to your absence.

Supplementing Retirement Savings

Life insurance can serve as a financial tool to supplement your retirement savings. Certain types of life insurance policies, such as permanent or whole life insurance, not only provide a death benefit but also accumulate cash value over time. This cash value can be accessed during your lifetime and used to supplement your retirement income, fund major expenses, or even serve as an emergency fund. Life insurance can be a valuable asset in diversifying your retirement savings and ensuring financial stability in your golden years.

Why do You Need to Have Accidental Death Insurance Cover?

While nobody likes to dwell on the possibility of accidents or untimely death, it is crucial to consider the potential impact on our loved ones. Here are some compelling reasons why you need to have accidental death insurance coverage:

Financial Security for Your Loved Ones

Accidents can have devastating consequences, and in the worst-case scenario, they can result in the loss of life. The sudden death of a family member can leave a significant financial burden on the surviving loved ones. Accidental death insurance provides a lump sum payment to the designated beneficiaries, helping them cope with immediate expenses, such as funeral costs, outstanding debts, and ongoing living expenses. This financial security can provide peace of mind during an already difficult time.

Additional Coverage to Supplement Life Insurance

While life insurance policies are essential for providing financial support to your family after your passing, they often do not cover accidental deaths. Accidental death insurance is designed to complement your existing life insurance policy by offering an additional layer of protection in the event of an accident. By having both types of coverage, you ensure that your loved ones are protected regardless of the cause of your death.

Affordable and Accessible

Accidental death insurance is generally more affordable than traditional life insurance policies. This type of insurance focuses solely on accidental deaths, making it a cost-effective option for individuals seeking coverage against sudden and unforeseen accidents. Additionally, accidental death insurance is relatively easy to obtain, as it typically does not require a medical examination. This accessibility makes it a viable option for individuals who may have difficulty obtaining other forms of life insurance.

Coverage for Accidental Injuries

Accidental death insurance not only provides a benefit in the case of death but may also offer coverage for accidental injuries. Depending on the policy, it can provide a payout for a range of injuries resulting from accidents, such as loss of a limb, paralysis, or disability. This coverage can help you cope with the financial implications of medical expenses, rehabilitation costs, or modifications to your home or vehicle to accommodate a disability.

What is the Cost of accidental and life insurance?

While life insurance offers broader coverage for a specified period or the entire lifetime of the insured, understanding the cost and benefits of each type of insurance is essential to make an informed decision about which one suits your needs. Let us now explore the cost factors and considerations associated with accidental insurance versus life insurance.

Cost of Accidental Insurance

The cost of accidental insurance varies based on several factors, including the coverage amount, age of the insured, occupation, and lifestyle. Since accidental insurance focuses solely on accidents, the premiums for this type of insurance tend to be relatively lower compared to life insurance. The premiums are primarily influenced by the level of coverage and the risk associated with the insured individual’s activities or occupation.

However, it is important to note that accidental insurance has limited coverage. It does not provide benefits for illnesses, natural causes of death, or death resulting from non-accidental causes. Therefore, while the cost may be lower, the coverage is restricted, making it important to consider the scope of protection needed carefully.

Cost of Life Insurance

The cost of life insurance is influenced by various factors, including the insured individual’s age, health condition, lifestyle choices, coverage amount, and the type of policy selected. Term life insurance tends to be more affordable compared to permanent life insurance. Permanent life insurance, on the other hand, offers coverage for the insured’s entire lifetime and often includes an investment or savings component, which can increase the overall cost.

Life insurance premiums are generally higher than accidental insurance premiums due to the broader coverage provided. However, the cost can be influenced by factors such as age and health. Younger individuals and those in good health typically pay lower premiums than older individuals or those with pre-existing medical conditions.

Can You Combine Both Accidental Death Insurance with Life Insurance?

Insurance plays a crucial role in safeguarding our financial future and providing protection for our loved ones in case of unfortunate events. When it comes to protecting ourselves and our families, two common types of insurance coverage often come to mind: accidental death insurance and life insurance. While these two policies serve different purposes, it is natural to wonder if they can be combined to provide comprehensive coverage. So, can you combine accidental death insurance with life insurance? Let us explore this question further.

By adding an accidental death rider to a life insurance policy, the insured person’s beneficiaries will receive a payout in the event of accidental death in addition to the regular death benefit provided by the life insurance policy. This can be beneficial for those who want to ensure their loved ones are financially protected in case of accidental death while still maintaining the broader coverage provided by life insurance.

However, it is important to note that combining accidental death insurance with life insurance through a rider or add-on is not the same as having a standalone accidental death insurance policy. Standalone accidental death insurance usually offers higher coverage amounts for accidental death and can provide benefits such as reimbursement for medical expenses resulting from accidents.

Before deciding to combine accidental death insurance with life insurance, it is crucial to evaluate your needs and consider your budget carefully. Assessing the risks you are most concerned about and understanding the potential coverage gaps in your existing life insurance policy will help you determine if adding an accidental death rider is the right choice for you.

Additionally, it is essential to review the terms and conditions of the accidental death rider carefully. Some riders may have specific exclusions or limitations that you should be aware of. It’s advisable to consult with an insurance professional or advisor who can provide personalized guidance based on your unique circumstances.

Do You Need Both Accidental and Life Insurance?

The decision to purchase both types of insurance ultimately depends on your individual circumstances, risk tolerance, and financial goals. If you have a family that relies on your income and you want to ensure their financial stability regardless of how you pass away, life insurance is a crucial component of your financial plan. It provides coverage for all causes of death, offering comprehensive protection.

On the other hand, if you have a higher risk tolerance and want additional coverage specifically for accidents, you might consider adding accidental death insurance to your portfolio. This can provide an extra financial cushion in case of unexpected accidents, particularly if you engage in activities that carry a higher risk.

It is worth mentioning that accidental death insurance is typically more affordable compared to life insurance. The premiums are often lower because the coverage is limited to accidental deaths. However, it’s crucial to carefully review the policy’s terms and conditions, as some policies may have specific exclusions or limitations that you need to be aware of.

How to Get Life Insurance and Accidental Death Insurance?

Planning for the future is crucial, and one aspect of this planning involves protecting yourself and your loved ones financially. Life insurance and accidental death insurance are two essential types of coverage that provide peace of mind by offering financial support in the event of unexpected circumstances.

Understanding Life Insurance

Life insurance is a contract between an individual and an insurance company, where the insurer guarantees a sum of money to be paid to the beneficiaries upon the insured person’s death. It acts as a financial safety net, ensuring that your loved ones are protected and financially secure when you’re no longer around to provide for them.

Assess Your Needs

The first step in acquiring life insurance is to evaluate your financial situation and determine the amount of coverage you require. Consider factors such as outstanding debts, mortgage payments, living expenses, and future financial goals. This assessment will help you choose an appropriate coverage amount.

Research Insurance Companies

Next, research different insurance companies and compare their policies, coverage options, premiums, and customer reviews. Look for reputable insurers with a strong track record in terms of customer service, financial stability, and claims settlement.

Select the Right Policy

Life insurance policies generally fall into two categories: term life insurance and permanent life insurance. Term life insurance provides coverage for a specific period, while permanent life insurance covers you for your entire life. Select the policy type that aligns with your needs, budget, and long-term goals.

Obtain Quotes and Apply

Once you have chosen a policy, contact the insurance companies to obtain quotes based on your requirements. Compare the premiums and benefits offered, ensuring they fit within your budget. Fill out the application form accurately, providing all necessary personal and medical information. The insurer may require a medical examination or request medical records to assess your insurability.

Underwriting and Approval

After submitting your application, the insurance company’s underwriting department will review it, assess the risks involved, and determine your eligibility and premium rates. The underwriting process may take a few weeks or longer. Once approved, you will receive a policy offer.

Policy Review and Acceptance

Carefully review the policy offer, ensuring that it aligns with your expectations and requirements. Understand the terms and conditions, coverage limits, premium payment schedule, and any additional riders or optional benefits. Seek clarification from the insurance company or a professional advisor if needed. If satisfied, accept the policy and make the required premium payments to activate the coverage.

Understanding Accidental Death Insurance

Accidental death insurance provides financial protection in the event of a covered accident resulting in the insured’s death. This type of insurance is separate from life insurance and is designed to offer additional coverage specific to accidental deaths.

Determine Your Coverage Needs

Evaluate your financial situation and assess whether accidental death insurance is necessary or not. Consider factors such as your existing life insurance coverage, financial responsibilities, and the potential impact of accidental death on your loved ones. Accidental death insurance may be particularly beneficial if you engage in high-risk activities or have a dangerous occupation.

Research Insurance Providers

Similar to life insurance, research and compare insurance companies offering accidental death insurance. Review their policies, coverage limits, exclusions, premiums, and reputation to ensure you select a reliable insurer.

Policy Evaluation

Carefully review the policy terms, conditions, and exclusions. Understand what events or circumstances are covered under the policy and the process for filing a claim. Determine whether the policy offers additional benefits, such as coverage for dismemberment or disability resulting from an accident.

Apply and Approval

Complete the application accurately, providing all necessary personal information. Unlike life insurance, accidental death insurance typically does not require a medical examination or extensive underwriting. The approval process is generally quicker, with coverage often being available immediately or shortly after applying.

Payment and Activation

Pay the required premium to activate the accidental death insurance coverage. Ensure you understand the payment schedule and remain up to date with premium payments to keep the policy active.

Differences Between Accidental Death vs. Life Insurance Policies

Accidental death insurance and Life Insurance are two common types of insurance policies that provide financial protection in the event of an untimely death. While both policies offer coverage in case of death, they have distinct differences in terms of coverage, benefits, and conditions. To better understand these differences, let us compare AD and Life Insurance policies in a tabular form:


Accidental death insurance

Life insurance


Provides coverage for accidental death or dismemberment

Provides coverage for death at any cause


Accidental death and dismemberment only

Death from any cause

Dismemberment coverage

Provides benefits for loss of limbs or certain body parts due to an accident

Not applicable

Death coverage

Coverage only in the event of an accidental death

Coverage in the event of death from any cause


Generally lower than life insurance premiums

Generally higher than AD & D (Accidental death and dismemberment) premiums

Benefit payment

Paid as a lump sum to the beneficiary

Paid as a lump sum to the beneficiary


When comparing life term insurance and accidental death insurance policies, it is clear that they serve different purposes and cater to different needs. Life term insurance provides coverage for a specified period, typically until the policyholder’s death, and offers financial protection to the beneficiaries in the event of the policyholder’s demise. On the other hand, accidental death insurance is designed to provide a lump-sum payment in the event of the insured person’s accidental death, regardless of the cause.

It is crucial for individuals to carefully evaluate their financial situation, long-term goals, and specific insurance needs before making a decision. Consulting with a knowledgeable insurance professional can also be beneficial in understanding the intricacies of both types of policies and determining the most appropriate coverage for individual circumstances.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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