Is There A Difference Between Accidental Death Insurance and Life Insurance?


Making the decision to take out an insurance policy is a big choice. You need to decide what type of cover and how much cover you need, to make sure that your family get proper financial support if something were to happen to you.

While choosing insurance, most people often get confused between accidental death insurance and standard life insurance. Accidental death insurance is undoubtedly a type of life insurance, but not the complete replacement of a life insurance policy. Depending on the situation, both has their own advantages over the other.

There are significant differences between accidental death insurance and standard life insurance; however, the actual difference lies in how they will protect you from different catastrophes.

There may be instances where people might choose to have both insurances, depending on factors such as lifestyle and budget. Meaning either or both of these policies might be suitable for you.


Accidental Death Insurance


Accidental death insurance provides a lump sum benefit if a person dies as a result of an accident/injury. It’s an easy and low-cost option that provides you with a lump sum payout.

As the name implies, accidental death insurance protects your family financially in the case that you lose your life in an accident. The benefits of this insurance can only be obtained if the person passes away in the accident or suffer a major injury during the accident and passes away within 12 months of the accident. If a person dies due to an illness, such as cancer, this insurance will not provide a benefit.

Accidental death insurance is not medically underwritten. People who have suffered a health problem can also get this cover without any exclusions, which makes it the best option for people who are not able to get life insurance.


Accidental death insurance provides a lump sum benefit if a person dies as a result of an accident/injury. Credit: Unsplash


Life Insurance


A life insurance policy, on the other hand, covers a person for death by any cause, i.e. both injury & illness.

Most life insurance policies pay a lump sum of money if you are diagnosed with a terminal illness also.

There are certain exclusions even in life insurance, including death caused by suicide or as a result of criminal activity, which are generally specified in the policy as not covered. Compared to accidental death insurance it has a higher premium which might not be as affordable for everyone.

Both life and accidental death insurance provide strong financial support to families in the case of the death of the policyholder. The primary goal of these insurance policies is to make sure that your family can live a decent life economically despite your death.

Both policies have a death benefit with a small difference – the reason for death. So, depending upon the policy and your needs, you can choose one or the other or a combination of both, whatever suits your needs better.


A life insurance policy covers a person for death by any cause, i.e. both injury & illness. Credit: Unsplash
Mike Wallis

Mike has over 25 years experience, having spent his first seven years working as a Broker at Jardine Lloyd Thomson in Melbourne and in 2002 was transferred to JLT’s Accident and Health Department in London. For four years (2002 – 2005) Mike was a specialist A&H Lloyd’s Broker and during this time developed excellent relationships with the Lloyd’s A&H underwriting fraternity. In 2006 he returned to Australia in a senior broking position with overall responsibility for Placement Strategy, including the implementation of underwriting facilities and the various authorities granted by Lloyd’s. Mike was the underwriter at two specialist Underwriting Agencies prior to founding Aspect Underwriting in 2016.