Unless you’re independently wealthy or make very little money, the chances are that you probably need disability insurance. The large majority of disability insurance claims are illness related, with musculoskeletal disorders, cancer, and mental health issues leading the main causes. However, for both short term and long term claims, injuries such as fractures, sprains, and strains of muscles and ligaments are a top 5 cause. Accident disability insurance can help pay your bills if you’re hurt or injured. If you’re concerned about an accident preventing you from working, then read on.
Types of Accident Disability Insurance
There are four main types of accident disability insurance.
The first two come as riders on other policies. Accident disability insurance can be found on products such as accidental death insurance and traditional disability insurance.
The third accident disability insurance comes as a standalone product. It is purchased specifically to protect against injury as opposed to a traditional disability insurance policy that would cover both accidents and illness.
The last option is group accident disability coverage, which is purchased through work and offered by companies like Aflac (which we can help you with as well).
Accidental Death and Disability
In the insurance industry, if you see the initialism AD&D, it normally stands for accidental death and dismemberment.
Often offered as a standalone policy or as a rider on a more traditional life insurance policy, accidental death and dismemberment policies pay claims if you die or lose body parts as the result of an accident or injury.
Depending on the company, you may purchase an accident disability insurance rider in conjunction with your accidental death policy. This rider would allow a claim if you could not work due to an accident, without death or that messy losing limbs part.
How It WorksAn accidental death policy with an accidental disability insurance rider allows the owner to claim if they miss working for an extended period due to an accident. These policies offer limited but valuable coverage, typically up to 60% of your gross monthly income (capped at 1800/mo) for up to two years. Benefits normally begin after 90 days of total disability.
Having these benefits can be really helpful in your time of need, especially if you have no other disability insurance.
Why Buy Accidental Death and Disability Insurance?
This type of policy can be very attractive to certain occupations, people who are young and live a very healthy lifestyle (so they are less likely to miss work due to illness), and people who can’t otherwise qualify for disability insurance.
Accidental death with a disability insurance rider has few to no health requirements (since you can’t go on the claim for illnesses anyway), even those declined for traditional disability insurance can qualify.
As this type of accidental disability insurance is built on a life insurance chassis, your beneficiary will receive a lump sum payout should you pass away from an accident/injury. While not a replacement
for traditional life insurance (which pays out on death for almost any reason), this additional coverage can be very valuable, especially to younger people where one of the top causes of death is accidents.
These policies can also come with riders (besides the accidental disability insurance rider) that waive your premiums or even return most of your premiums to you if the policy goes unused.
Like most riders, adding these features will make the policy more costly. However, some people like these additions and will gladly pay for them.
Personal accident and disability insurance is very affordable. Although it is not a substitute for traditional disability insurance (income protection insurance), the rates make it a great alternative to not purchasing any coverage due to cost.
Disability Insurance with an Accident Rider
As mentioned earlier, disability insurance is critical if you and your family rely on your income to pay the bills.
Disability insurance only covers the insured and will only payout based on your income. If you have a lower benefit amount because you have disability insurance for self-employed individuals or family members need coverage if an injury occurs, an individual accident insurance rider may be attractive.
How It WorksAccident disability insurance riders are attached to regular disability insurance policies. They provide benefits to the policy owner and his or her family (if selected) if they suffer an accident, even if there is no disability claim. There is usually a list of covered accidents and an amount payable. For instance, a dislocated knee may pay $1,500 whereas something more serious like losing a foot may pay $11,250. These are typically lump sum cash benefits.
For those that need a traditional disability policy but want to cover themselves for accidents, even if they don’t make a disability claim, an accident disability insurance rider can be very helpful.
Why Buy Disability Insurance with an Accident Rider?
You likely need a disability insurance policy anyway, why not have it pay you extra for accidents when they occur?
The two main reasons we see people add this rider is to protect their family (because it can cover more than just the insured) and to offset the high deductible of their health insurance.
If your child needed an emergency room visit and your deductible is really high, you’re likely footing a big chunk of that bill yourself. Having an accident rider on a traditional disability insurance policy can provide you with cash on hand to help reduce the sting of not having only an injured child, but paying a lot for it.
If you’d like to see a schedule of covered injuries under one rider, feel free to complete the form on the left and note what you’d like in the comments. We’d be happy to email it to you.
Stand-alone Accident Disability Insurance
There are very few pure stand-alone accident disability insurance policies on the market.
However, they can be a great alternative for someone who either can’t afford or can’t qualify for traditional disability insurance coverage.
For ExampleLet’s say that you’re a 35-year-old male driver with a delivery route looking for disability insurance. If you made 50k annually and wanted a policy with a 60-day wait that covers you for two years, you could pay 68.77 per month for $1,500 per month in coverage. The same policy design would cost you $38.33/mo for $3,000 per month in coverage if it were an accident disability insurance policy (which doesn’t
pay out for illness, only accident/injury). Double the coverage for almost half the price.
A stand-alone accident policy is especially attractive to those who have hard to insure occupations, those who are younger (where accidents are a much larger source of claims), people with a history of health
concerns, or someone who is unable to pay for a more robust policy.
Why Buy Stand-alone Accident Disability Insurance?
These policies have been very easy to qualify for and purchase.
Because they only pay benefits if you’re in an accident, they require no physical exam similar to no exam disability insurance.
Unlike traditional no exam disability coverage, accident only disability insurance has very few questions on the application and does not require medical records from your physician.
You can normally get an accident disability insurance policy very quickly as opposed to a traditional disability insurance policy.
Last, although most disability insurance claims are from illness and not accidents, many people prefer this type of coverage “in case something happens” since they only can envision themselves in a car accident, not getting sick.
Group Accident Disability Insurance
Offered through companies like Aflac, group accident disability insurance may be available through your work.
These plans are normally available to companies with three or more employees and can be valuable for professions that are traditionally hard to insure otherwise, such as bartenders.
Like all of the other plans discussed in this article, they will not pay claims for sickness/illness, only for accidents.
Why Buy Group Accident Disability Insurance?
People buy these policies for three reasons:
①The policies are cheap
②They are easy to purchase
③The premiums can be deducted from your paycheck
Group policies, although not as comprehensive as an individual policy, are often less expensive to purchase at younger ages. There is normally little to no underwriting making them a very easy policy to add on to other benefits. Finally, group policies can be paid for through payroll deduction. For those who live paycheck to paycheck, that can be very attractive.
Having some form of disability insurance is critical for almost everyone unless you’re one of the lucky few who shouldn’t buy disability insurance.
A traditional disability insurance policy will cover you (pay claims) if you’re unable to do your job for almost any reason. An accident disability insurance policy will only pay out if you’re unable to work due to a physical injury.
While that might not be ideal, having some coverage is certainly preferable to going without any.
Add in that accident coverage is a form of no exam disability insurance that covers a much larger amount of professions and the fact that it is very easy to qualify for, it is easy to understand its popularity.
If you need an accident disability insurance policy, we can help. Complete the quote form on the left or simply contact us.
We will find you the best policy for your needs.