Accidental Death Insurance in Australia for Those on a Budget
If you are unable to obtain full life insurance coverage because it's too expensive or because of a medical condition or dangerous occupation, accidental death insurance might be an excellent way to protect your family's financial future should you die because of an accident.
Accidental death insurance in Australia is designed for people who can't get a term life insurance policy but still want to provide financial benefits to their loved ones if they should suddenly and unexpectedly pass away due to an accident. For example, deaths from drowning, falling, traffic and construction accidents, fireworks discharge etc.
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An accidental death policy can usually be purchased as a stand-alone policy or as a rider on your regular life insurance policy and will typically payout if death was caused by an accident, for example:
- Road accidents
Australian road deaths by road user group: January 2017 to April 2018
Accidents at work occur less frequently but are more likely for people working in high-risk occupations that are not able to find affordable life insurance cover.
According to Safe Work Australia as at 11 May 2018, 46 Australian workers were killed by accident at work in 2018, 17 in the transport, postal and warehousing sector, 11 om agriculture, forestry and fishing and 10 in construction.
Worker fatalities between 2003 and 2016 were primarily from vehicle collisions, falls from a height, being hit or trapped by a moving or falling objects.
The benefit payment can be used to help your family pay for your final expenses and cover the cost of their day-to-day living, including things like the mortgage, car repayments and school fees.
Coverage is usually available to Australian residents between the ages of 18 and 64 and expires at age 99, depending on the insurer.
- Easy and quick application process with no medical questions or medical exams required.
- Guaranteed acceptance, despite your medical history, occupation and lifestyle.
- Covers deaths resulting from many occupations that standard term life insurance policies will not cover.
- Usually able to extend coverage to include personal accident insurance.
- Generally, premiums are very affordable.
- A choice between $500,000 up to $1million worth of cover depending on the insurer.
The average cost
The premium you pay will depend on the level of cover you want, your age when the cover begins, and your gender. Usually, insurers will have different rates that apply to each occupational category, generally, the higher the risk, the more expensive your premium.
The amount of coverage you need depends on the lump sum benefit your loved will need when you’re no longer there to provide your income and support.
Life vs accidental death insurance
|Term life insurance||Accidental death cover|
|In most cases requires medical and occupational information when applying for a policy.||Guarantees acceptance. Generally, does not require a medical exam and usually, no health and occupation questions will be asked.|
|Typically provides more coverage than accident only insurance, including instances of death resulting from illnesses and natural causes.||The policy only pays out in case of accidental death, and it must be proven that an accident directly caused death.|
|Term life insurance is generally more expensive than accident insurance.||Premiums are usually cheaper because it only covers you in case of death due to an accident.|
|You can typically choose the amount of life insurance cover you want when buying a retail policy.||Cover is usually limited to between $500,000 and $1million lump sum benefit, depending on the insurer.|
When deciding which type of cover is suitable for you, it’s essential that you review your family’s financial needs in the event of your death.
Is accidental death insurance worth it?
Accidental death cover makes it easier for you to protect your family in case of your death and provides an affordable alternative to life insurance cover when you are not able to obtain it because of a pre-existing medical condition, a hazardous occupation or your budget.
It might also be an excellent option for younger Australians who do not have a family relying on their income. Younger people are usually at higher risk of suffering an accident and passing away, most probably to a more carefree, sometimes reckless, way of life.
Accident only life insurance policies typically exclude coverage if death occurs 3 months or more after the accident. Other general exclusions you need to be aware of includes:
- Natural Causes
- Surgical complications
- Mental illness
- Drug abuse and overdose
- Intoxication and drunk driving
- Illegal activity and war
- High-risk sports and activities like skydiving and motor racing
- Engaging in professional sports as your occupation.
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Frequently asked and answered questions
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Protect your income against illnesses or injuries. Compare the difference between an income protection policy and an accident and sickness insurance policy. Although they might seem similar, there are some key difference you need to know about. A quick table review to help you make an informed decision.
If you’re a contractor, have a high-risk occupation or a pre-existing medical condition and are not able to find affordable income protection insurance, personal accident insurance might be the solution; providing up to 75% of your income should you be unable to work because of an injury caused by an accident.