Can You Claim Both Life Insurance and Accidental Death Insurance Together

At a glance:

• Yes, you can claim both life insurance and accidental death insurance, but only if the policies are structured correctly, and the cause of death meets each policy’s conditions.
• There are two key types of accidental death cover: a standalone policy (separate from life insurance) and an accidental death rider (added to a life policy to boost the payout).
• Combined payouts are possible after an accidental death.
• Superannuation policies don’t always include accidental death insurance, so it’s essential to review your coverage.

In Australia, it is common for people to have multiple types of insurance policies at once, such as accidental death insurance, income protection insurance and more. These policies are often provided through superannuation, work cover, or personal cover. However, having more than one policy can be confusing.

One of the most common questions people ask is: Can their family claim both life insurance and accidental death insurance if someone dies in an accident? Is it worth paying for two insurance policies, or is it just a waste of money?

To make sure your family gets the right financial support, it’s important to understand how these policies work together. In this blog, we will cover whether the family can claim both life and accidental death insurance policies in a death by accident.

The Short Answer: Yes, But It Depends on Your Policy Structure

In most cases, yes, it is possible to claim both insurance benefits. However, the eligibility for payout terms and how much the family or the beneficiary will receive are based on the policy’s structure. You should note the specific terms of your insurance policies, such as exclusions, limitations, and definitions of accidental death. Some insurers may have conditions that could reduce the payout amount or prevent double claiming in certain situations.

There are two common policies that are relevant in this scenario: Standalone Accidental Death Insurance and the Accidental Death Rider attached to life insurance policies.

• Standalone Accidental Death Insurance (ADI): The standalone policy named Accidental Death Insurance (ADI) functions as a separate coverage that delivers lump sum payments when someone insured dies because of an accident.
• Accidental Death Rider: Life insurance policyholders have an opportunity to activate an accidental death benefit as a supplementary option through the Accidental Death Rider. The life insurance policy compensation increases through a defined amount when death occurs as a result of an accident. Meaning, the beneficiary receives an extra sum on top of the standard life insurance payout.

To sum it up, when the cause of death satisfies the requirements outlined in both policies, both benefits from a standard life policy and a standalone ADI policy can normally be paid together.

Read more: Combining accidental death with other insurance for comprehensive coverage.

How Combined Payouts Work

Let’s understand how combined payout works with two common scenarios.

Scenario 1: Life Insurance Policy + Separate ADI Policy

Suppose the insured person holds a standard life insurance policy and a standalone Accidental Death Insurance (ADI) policy together. In this case, the beneficiary could receive two separate payouts from both insurers if the cause of death matches their policy requirements.

For example, let’s say the policyholder maintained insurance coverage worth $500,000 through their super fund, together with $300,000 in separate accidental death coverage from an underwriting company in Australia.

If a fatal road accident occurred and the cause of death met the terms of both policies, the insurers would likely approve both claims. Assuming there were no exclusions or restrictions, the beneficiaries could receive full benefits of $500,000 from the life insurance policy and $300,000 from the standalone ADI policy.

The combined $800,000 payment from these two insurance plans would allow the family to meet their financial obligations, including funeral expenses, debt repayment and future living costs.

Scenario 2: Life Insurance With an ADI Rider

This setup adds extra accidental death cover to the main life insurance policy. When someone has life insurance with an Accidental Death Benefit (ADB) Rider add-on, the overall coverage amount increases if the death is caused by an accident.

For example, someone has a policy offering $400,000 in standard life cover and an additional $400,000 through the ADI rider for accidental death situations.

If the insured person were to die in an accident and it met the policy’s criteria for accidental death, the insurer could approve a combined total payment of $800,000, which includes the main policy value and the attached rider benefit.

If approved, a single claim filed to the insurer through their regular procedure enables beneficiaries to receive a higher payment because of the accidental death rider.

Why Accidental Death Insurance Often Pays Out Faster

One of the main benefits of a standalone Accidental Death insurance policy stems from its quick payout compared to life insurance policies.

Aspect Underwriting’s ADI offerings, for example, can offer fast payouts, especially in situations where the cause of death is clearly an accident, such as motorbike or car accidents, falls, or other unexpected events. The amount you’re insured for usually ranges from $100,000 to $1,000,000, depending on your needs and situation. Such policies designed for accident coverage normally demonstrate the following characteristics:

• Claims processing occurs at a faster rate if it is evident that death is the result of accidents and medical records show documentation of such circumstances.
• Pre-defined benefit amounts.
• The insurance policy features simple underwriting methods together with a possibility of waived medical tests for incoming policyholders.

Key Conditions That Must Be Met for Claiming Accidental Death Insurance Benefits

To claim Accidental Death Insurance, the following terms are usually applied:

• The death must meet the insurer’s definition of “accidental.” For instance, the definition is usually sudden, unexpected, and caused by external means.
• The policy must be active, and premiums must be paid up-to-date.
• There must be no applicable exclusions, such as high-risk activity clauses or pre-existing health issues.

Covered Vs Excluded Case for Accidental Death Insurance

Read More: Explore this in-depth explanation of accidental death insurance coverage and exclusions.

Important Note

Australian superannuation beneficiaries make the misconception that their death benefit includes accidental death insurance coverage, yet this is often incorrect. A super policy generally consists only of life insurance protection for its beneficiaries. Additional accidental death benefits require separate coverage or riders. So, always read the Product Disclosure Statement (PDS) or speak to a trusted insurance adviser to ensure you’re not leaving gaps in your coverage.

All in all, you can claim both life insurance and accidental death insurance, but only if your policies are structured correctly and the claim meets specific conditions. If you’re ready to make a claim or want more information, check out our tips for a smooth accidental death insurance claim.