Accidental Death Benefit Rider In Term InsuranceBy Okbima 06 Dec 2023
The Accidental Death Benefit Rider is an additional feature that can be added to a term insurance policy. This rider provides an additional payout if the policyholder were to die as a result of an accident. It is a valuable benefit that offers financial protection to the policyholder's family and loved ones in the event of an unforeseen accident.
What is an Accidental Death Benefit Rider in a Term Insurance Plan?
An Accidental Death Benefit Rider is an additional feature that can be added to a Term Insurance Plan. It provides an additional payout in the event of death due to an accident. This rider ensures that the beneficiary of the policy receives an extra sum assured amount in case the insured passes away as a result of an accident.
This rider is particularly beneficial for individuals engaged in high-risk professions or those who frequently travel or engage in adventurous activities. Overall, the Accidental Death Benefit Rider is designed to provide an added layer of financial protection and peace of mind to policyholders and their loved ones.
What is the Benefits of Accidental Death Benefit Rider?
The accidental death benefit rider is a valuable addition to a term insurance plan that provides an additional payout if the insured dies as a result of an accident. While the primary purpose of term insurance is to provide financial protection to the policyholder's beneficiaries upon their death, the accidental death benefit rider offers several advantages that are mentioned below.
• Additional coverage: The accidental death benefit rider provides an extra layer of protection specifically for accidental deaths. It ensures that the policyholder's beneficiaries receive an additional payout if the insured's death occurs due to a covered accident, over and above the base life insurance benefit.
• Financial security: Accidents can happen unexpectedly and by adding this rider to a term insurance policy, individuals can enhance their family's financial security in case they are to pass away from an accident, and can be used to cover funeral and burial expenses, outstanding debts, mortgage payments, or educational expenses.
• Affordable option: The accidental death benefit rider is generally available as an add-on to a term insurance policy at a relatively low cost. Compared to buying a separate accidental death insurance policy, adding this rider allows individuals to get additional coverage without the need for an additional premium.
• Flexibility: The accidental death benefit rider can meet the specific needs of the policyholder. It can be added to a term life, whole life, or universal life insurance policy, offering flexibility based on an individual's financial plan. This ability to customize makes it a versatile choice for those seeking more comprehensive coverage.
• Peace of mind: By including an accidental death benefit rider, policyholders gain peace of mind knowing that their loved ones are protected and financially supported if their death is due to an accident.
How Does Accidental Death Benefit Rider Work?
The Accidental Death Benefit Rider is an additional feature that can be added to a term life insurance policy to provide extra financial protection in case of accidental death.
For example, let's consider the scenario of Rohan, who purchased a term life insurance policy with a sum assured of 50 Lacs and an included accidental death benefit rider of 15 Lacs.
If unfortunately, Rohan passes away due to an accident within the policy term, the insurance company will pay out the base sum assured of 50 Lacs as per the primary policy terms. In addition, the accidental death benefit rider will come into play, leading to an extra payout of 15 Lacs.
Consequently, Rohan's nominee will receive a total of 65 Lacs from the insurer. This combined amount aims to provide comprehensive financial support to the nominee, helping them meet various obligations and financial needs during a challenging time.
What is Covered in the Accidental Death Benefit Rider?
An Accidental Death Benefit Rider is an add-on feature that can be attached to a term insurance policy. This rider provides an additional payout to the beneficiary if the insured person dies due to an accident. It is important to note that this rider only covers accidental deaths and does not provide any benefits for deaths resulting from natural causes, illness, or suicide. Typically, this rider covers a wide range of accidents, including but not limited to:
- Airplane crashes: Airplane crashes can result in loss of life. If the insured person dies as a result of an airplane crash, the rider can provide an additional payout to the beneficiary.
- Motor vehicle accidents: Accidents involving cars, motorcycles, trucks, or any other vehicle on the road.
- Accidental falls: Deaths from accidental falls, such as slipping on stairs, tripping, or falling from a height.
- Accidental drowning: Deaths that occur due to accidental drowning in a swimming pool, lake, river, or any other body of water.
- Accidental poisoning: Deaths from poisoning, whether it is accidental ingestion of toxic substances or accidental exposure to hazardous chemicals.
- Accidental fires: Deaths caused by accidental fires, such as house fires, workplace fires, or wildfires.
- Accidental injuries: Deaths from accidental injuries, such as being struck by a falling object, getting electrocuted, or suffering fatal injuries in an accident.
Note: It is important to review the specific terms and conditions of the Accidental Death Benefit Rider, as coverage may vary among insurance providers. Consult with Our Expert Before Buying the Accidental Death Benefit Rider.
What is Not Covered in the Accidental Death Benefit Rider?
The Accidental Death Benefit Rider is an additional coverage that can be attached to a term insurance policy. It provides an extra payout in case the insured individual dies due to an accident.
While this rider can offer financial protection to the policyholder's beneficiaries in the event of accidental death, there are certain situations and circumstances that are typically not covered under this rider. Some of them include:
War: Accidental death from war or any act of war is typically excluded from coverage. This exclusion is in place to mitigate the increased risks associated with war-related events
Hazardous Sports and Activities: Engaging in hazardous sports or activities, such as skydiving, bungee jumping, or other extreme sports, may be excluded from coverage.
Natural causes: Accidental death benefit riders typically exclude coverage for deaths from natural causes, such as illnesses, diseases, or natural aging processes. These types of deaths are generally covered under the base life insurance policy instead.
Suicide: Most accidental death benefit riders do not cover deaths from suicide, irrespective of whether it is intentional or accidental. In such cases, the standard suicide provision in the life insurance policy applies.
Illegal activities: Deaths from illegal activities or participation in illegal acts, such as criminal actions or drug abuse, are usually not covered by an accidental death benefit rider.
Military service: If the insured person's death occurs while serving in the military during a time of war or conflict, some accidental death benefit riders may exclude coverage. However, most life insurance policies include provisions covering death in such service-related scenarios.
Intoxication: Accidental deaths due to being under the influence of alcohol or drugs beyond the legal limit may not be covered by the accidental death benefit rider. This exclusion encourages responsible behavior.
Aviation-related incidents: Some accidental death benefit riders may exclude coverage for deaths that result from aviation accidents, especially when the insured person is privately piloting an aircraft. However, commercial air travel accidents are typically covered.
Why Should I Buy Accidental Death Benefit Rider?
There are several reasons why you should consider buying an accidental death benefit rider. While no one likes to think about unfortunate accidents or unexpected events, they can happen to anyone at any time. Here's why it might be a good idea to have an accidental death benefit rider added to your insurance policy:
• Financial Protection: The primary reason to consider buying an accidental death benefit rider is to provide financial protection for your loved ones in case of accidental death. This rider can provide an additional sum of money to help ease the financial strain during such difficult times.
• Affordability: Accidental death benefit riders are generally inexpensive and can be added to an existing life or disability insurance policy. Compared to the cost of a comprehensive life insurance policy, these riders offer a budget-friendly option.
• Additional Coverage: Accidental death benefit riders provide coverage beyond the typical causes of death covered by traditional life insurance policies. Whether it's a car accident, a workplace mishap, or any other accidental incident, this rider offers an extra layer of protection that can supplement your existing coverage.
• No Medical Examination: Unlike other insurance policies, accidental death benefit riders usually do not require a medical examination or extensive underwriting. This means that even individuals with pre-existing health conditions or those who may have difficulty obtaining standard life insurance policies can still qualify for this rider.
Documents Required to Claim Accidental Death Benefit Rider
The process of claiming Accidental Death Benefit Rider involves submitting various documents to the insurance company. Below is the list of documents typically required for claiming an accidental death benefit rider.
Original Policy Documents: The original term life insurance policy documents, including the endorsement or rider document specifying the Accidental Death Benefit Rider, need to be submitted.
Filled Claim Application: A completed claim application form provided by the insurance company is essential. This form captures necessary details about the claim and helps the claim processing.
Photo ID Proof and Address Proof of Policyholder: Photocopies of the policyholder's photo ID proof (such as Aadhar card, passport, or driver's license) and address proof (utility bill, passport, etc.) are typically required.
Bank Account Details of the Policyholder: Providing the bank account details of the policyholder ensures that the claim amount can be disbursed efficiently through online transfer.
Copy or Original FIR (First Information Report): In the case of accidental death, an FIR filed with the local police is often required. Submitting a copy of the original FIR helps validate the circumstances of the accident.
Postmortem Report: A postmortem report is crucial for cases involving accidental deaths. It provides detailed information about the cause and nature of the death, helping the insurance company assess the claim.
Policy Investigation Report: The insurance company may conduct an investigation to validate the claim. Any reports generated as part of this investigation, documenting the circumstances of the accident and death, may be required.
Driving License: If the accident involves a vehicle, providing the driving license of the policyholder can be relevant for the insurance company to assess the circumstances leading to the accident.
In conclusion, the accidental death benefit rider is a valuable addition to a term insurance policy that provides an extra layer of financial protection for policyholders and their families in the event of an untimely accidental death. This rider pays out an additional benefit in addition to the base life insurance coverage if the insured dies due to an accident. While the accidental death benefit rider may not be necessary for everyone, it is worth considering for individuals who engage in high-risk activities or have hazardous occupations.
Can a person purchase accidental death benefits in term insurance online?
Yes, many insurance companies offer online platforms for purchasing term insurance with accidental death benefits.
What are the various accidents that a person can claim insurance against?
Accidental death benefits typically cover a wide range of accidents, including vehicle accidents, falls, drowning, and poisoning.
Is suicide also considered accidental death?
No, suicide is generally excluded from accidental death benefits in term insurance policies.
Can I purchase accidental term insurance for my parents?
Yes, you can purchase accidental term insurance for your parents, but you will need their consent and cooperation to complete the application process.
What is the difference between the death benefit and the accidental death benefit?
A death benefit is the standard payout provided by a term insurance policy upon the policyholder's death, regardless of the cause. An accidental death benefit is an additional payout offered by some term insurance policies if the policyholder dies due to an accident.
How much is an accidental death benefit?
The amount of an accidental death benefit varies depending on the insurance company, the policyholder's age, health, and occupation. However, it is typically a multiple of the base policy's death benefit. For example, if the base policy's death benefit is Rs. 10 lakh, the accidental death benefit might pay an additional Rs. 5 lakh if the policyholder dies in an accident.
Are accidents covered in a term insurance plan?
Some term insurance plans include accidental death benefits, while others do not. It is important to check the specific terms of your policy to see if accidental death benefits are included.
What is the accidental death benefit for income taxpayers?
There is no specific tax deduction for accidental death benefits in India. However, the proceeds from an accidental death benefit policy are generally exempt from income tax under Section 10(10D) of the Income Tax Act.