Accidental Insurance Policies - What You Need to Know - Are You Covered?

Accident Policies. Some policies cover only accidents and not illness. As you might suspect, policies like this are very specific about what is considered an accident. It is extremely important to understand what the insurance company defines as an accident.

Generally, an accident to the health insurance industry is considered as unforeseen and unintended. Remember, that when discussing accidents in any policy that includes an accidental provision, it is important to define what an accident is, not just accident specific policies.

Accident benefits are most commonly paid for...

• Accidental loss of life (also called accidental death)
• Accidental loss of limb or sight (dismemberment)
• Loss of time and/or income
• Hospital expenses
• Surgical expenses
• Medical expenses like visits to the doctor.

Let's expand a bit on dismemberment. As we said, this would be loss of limb or sight, however, different states have statutes that define dismemberment and they can vary from state to state. This is a subject that you need to discuss with your insurance agent to determine what actually constitutes dismemberment in your state.

Side Note: Did you know that every regulates the insurance industry for that state? Your state has a huge impact in the coverage you get in your policies.

Accidental Death Benefit can also be referred to as "principal sum." This type of coverage should not be confused with life insurance. There is a huge of difference between the two. Life insurance policies will generally be paid regardless of the cause of death (although, suicide is not covered in most policies). An accidental benefit is paid ONLY if the death is accidental as opposed to a death by natural causes or illness.

The person who received the death benefit is called the beneficiary. The policy owner (or holder) has the right and responsibility of naming beneficiaries. Usually there is a primary beneficiary however the policy holder can assign a second and even a third beneficiary.

The primary beneficiary is the first person in line to receive the benefit in the event of the death of the policy holder. They can also name a second beneficiary who would receive the benefit in the event the primary beneficiary dies before the insured. Some policies can include a third beneficiary who would be in line after the first two. Although, some policies allow you to divide (by percentage) between the beneficiaries.

There is much more to be learned about accidental death policies, but I would like to mention one important component before we move on. An accidental death may not be instant. A person can die as a result of an accidental injury months after the accident occurrence. Read your policy carefully because most stipulate that the accidental death benefit will only be paid if death occurs within 90 days of the accident.

Side Note: ALWAYS read an insurance policy. It does not matter what type of policy, know your policy. I have spent many hours with clients that did not know what was covered and what wasn't covered. This is especially true when you have employer (group) health insurance.