Should seniors have accidental-death insurance?

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Dear Insurance Adviser,
My wife has been paying $19 a month for years on an accidental-death insurance policy initially valued at $100,000 prior to 65 years of age. We have no life insurance and are retired in our early 70s.

I read this policy for the first time today. It is purely an accidental-death benefits policy and excludes all other possible causes of death, including illness and disease. The policy’s payout has shrunk from the initial $100,000 to $75,000 and will decrease to $50,000 in a few years.

Should we just cancel the policy? The chance of accidental death at our ages is statistically quite slim, particularly since we do not travel. Thank you.
— Joseph

Dear Joseph,
I always advise people to stay away from Las Vegas-style insurance policies that pay out only under certain conditions. Accidental-death insurance is one of those types.

Buying an accidental policy that wouldn’t cover death from illness or other natural causes is a little bit like insuring your home for fires but not tornadoes.

When you’re insuring your home, you want to make sure you have coverage for all the major risks for your geographic area. If you’re exposed to flooding, you want to buy flood insurance, too. If you’re exposed to earthquakes, you want to buy optional earthquake insurance.

The same is true with insuring your life. If the policy doesn’t cover your biggest death risks, don’t buy it. As for the accidental-death policy you already have, don’t keep it — with one exception. If you can’t qualify, medically, for new life insurance, you take what you can get.

I recommend that you meet with a life insurance agent or financial planner to determine whether you even need life insurance. If you do need it, then spend your $19 a month toward true life insurance that covers all kinds of accidental and natural deaths.

Good luck!

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