Accidental death policies

It is estimated that in the United States, over 400 people die from accidental death each day. In recent years, more companies and individuals have begun to offer accident insurance for employees who are at a high risk for accidental death. Accidental death policies work similarly to term life insurance policies which pay out benefits when the insured individual dies as a result of an accident. The policy's return on investment ranges from 1-3% per year with no set end date for the period in which payments can be made on the policy.

There are two different types of accidental death policies: accidental death only and accidental death plus. With an accidental death only policy, the company or individual is insured for one lump sum of money that will be paid out in the case of an accident. With an accidental death plus policy, the company or individual is insured for one lump sum and a smaller amount each year.

The main purpose of these policies is to protect against liability in the event that someone dies as a result of an accident involving a business. If a worker dies while working, the business owner may be responsible for paying his family if they can prove that negligence contributed to their family member's death. In addition, if a family member is killed in an accident that was not the fault of the business, the family may be able to sue the business for financial damages. Accidental death policies offer a way for businesses to protect themselves and their workers from these lawsuits.

The types of businesses that offer accidental death policies are mostly construction companies and large corporations. Large corporations are less likely to offer accidental death policies with workers as they usually have more money invested in them than they know what to do with; thus, they sacrifice profits making these policies more popular among construction companies. Also, many companies provide accidental death benefits as a way to keep their employees happy and prevent them from finding another job if the employee is injured at work.

Accidental death policies are fairly new and are not yet included in the financial services industry's list of products; therefore, they tend to be more expensive than term life insurance. In addition, not all companies offer accidental death policies because of the steep cost involved. Some experts believe that if accidental death policies were to become more popular, they could become cheaper because they would be backed by an insurance company.

Advocates of these policies think that they can help lower health care costs which may result in increased productivity for business owners. The idea is that if a worker is protected from dying as a result of an accident, he will have less stress and will be able to save money for his family's future in case something does happen.

Critics believe that these policies could backfire as well. The company or individual might not make any money after the accident and will have lost out on profits they could have made in the first place. Also, it is possible that a person may not be covered by an accidental death policy if he/she is unable to afford it or chooses not to purchase it. These policies are also relatively new and have only been around since the late 1980s so their popularity is limited, especially for their cost compared to other types of insurance.

Accidental death policies are legal in many states and Canada. However, accidental death policies are illegal in a few states in the United States and are limited by law in Canada. The states that do not allow these policies are Texas, Michigan, Iowa, and Alabama. In Canada, accidental death only policies are allowed if they meet three criteria: 1) the company's insurance needs have been met in the past such as through another policy or mortgage, 2) a meaningful level of risk is presented by the work environment, and 3) accidents occur frequently enough to justify offering coverage. Accidental death plus policies only allow payment for one year instead of ten years if an accident occurs within that time frame. Accidental death only policies also substantially cut down on liability payouts because of the shorter term.

http://www.investopedia.com/terms/a/accidental-death-policies.asp

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https://web3.dmsesupplychaingroup.com/pdfs/forms/accidentaldeathpolicies.pdf

http://www.investopedia.com/terms/a/accidental-death-policies.asp

Managing Director of the Fleming Group, Inc., Former President of Aetna Life & Casualty Company and Senior Vice President of Aetna Life & Casualty Insurance Company

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Conclusion

Accidental death policies have become an increasingly popular

contribution toward private employer-provided life insurance. This is due

to changes in the way employers fund coverage, coupled with an increase in workers’ compensation claims and the growth in personal injury cases.

The value of accidental death policies has increased to more than $13 billion, according to ILSR's analysis of insurance industry financial reports. 

Since life insurance alone cannot replace lost income through a fatality, employers should consider accident death benefits as part of their overall life insurance policy strategies. Accident death policies pay out a series of benefits over time to families in case too many people die at work within a specified time frame or number of family members are lost.