Accidental Death Benefit Rider in Life Insurance

Riders serve as a crucial supplement to the life insurance policies. They offer an additional protection layer covering unexpected events requiring financial support.

Among the various riders in life insurance, the accidental death benefit rider stands as one of the most important ones. It provides an additional sum assured to the beneficiaries in case of accidental death of the policyholder, thus ensuring comprehensive financial protection for the future.

Read on to learn more about the accidental death benefit rider.

Accidental death benefit rider provides an additional payout to the beneficiaries of the policy if the policyholder dies due to an accident. This payment is in addition to the death benefit already provided by the base policy.

Though every death shatters the family emotionally and financially, accidental deaths hit more on every level. They are accompanied by additional financial requirements and stress for the family owing to the complex medical processes involved while trying to save a life. 

The accidental death benefit rider is especially beneficial for individuals working in high-risk jobs or those who frequently travel. It covers road accidents, homicides, death due to falling from height, death from fire, plane crashes, train accidents and the like.

Is It necessary to buy an Accidental Death Benefit Rider?

No, it's not necessary to but an accidental death benefit rider. It is an optional rider that can be added to your base policy for a nominal premium.

However, adding an accidental death benefit rider to your policy ensures that your financial coverage is enhanced to include any unforeseen accidental death.

In insurance terms, accidental death means when a person dies because of an unexpected and non-deliberate external event. 

This typically excludes deaths caused by natural causes, illnesses, self-inflicted harm and other exclusions as mentioned in the policy. 

For a death to be classified as accidental, it must be confirmed that the fatal incident was sudden, unforeseen and involuntary. For example, deaths resulting from car accidents, drowning and accidents involving machinery or equipment. 

However, the specific definitions and exclusions can vary significantly across different insurance policies and insurers.  

Any unforeseen event that causes bodily injury to a person, ultimately resulting in the death of the person within 180 days of the accident, is covered under the ADB rider as the case of an accidental death. 

In such a case, the beneficiary receives a lump sum amount as per the rider coverage in addition to the basic sum assured. 

Let’s consider the example of Mr. Rohan.

Mr Rohan bought a term plan of ₹1 crore at age 35 for 15 years of policy tenure. He added an accidental death benefit rider with a coverage of ₹ 20 lacs. 

Unfortunately, Mr. Rohan met with a road accident when he was 40. It was a critical accident where he struggled for his life and was on life support for almost two weeks before finally succumbing to his injuries. Apart from the heavy emotional turmoil that the family went through, they also had to deal with hospital expenses that amounted to around 18 lacs.

On his death, his beneficiary was paid a total death benefit of ₹ 1.2 crores:  1 crore from the term plan and 20 lacs from the accidental death benefit rider. Thus, his coverage planning of 1 crore for his family remained intact while the rider took care of the extra hospital expenses.

Though an accidental death benefit rider mainly covers cases of accidental death, there are some kinds of accidental deaths that are excluded from its coverage. Though the list might differ a little across insurers, however, majorly, the death should not be caused by an accident due to:

1. Suicide or self-inflicted injuries due to any reason.
2. Engaging in any criminal or illegal activities.
3. Adventure sports that might pose a life threat.
4. Substance Abuse or Drug Overdose.
   
5. War that is declared or not or civil commotion.

1. Frequent Travelers

2. High-Risk Job Holders

3. Primary Breadwinners with Dependents

4. Regular Commuters

Like all other insurance policies and riders, there are certain eligibility requirements to buy an accidental death benefit rider: 

• Age: The applicant must be in the age group of 18-60 years. Some insurers might offer the rider till 65 years.  
• Base Insurance Policy: A rider can be purchased only when you have a base life insurance policy.  
• Policy Terms: Check your base policy and the insurer’s terms and conditions. Some policies allow to add the rider only at the inception of the policy or on policy anniversary. Check your policy details and add accordingly.  

1. Duly Filled Claim Form

2. Death Certificate

3. Policy Document

4. KYC Documents of Beneficiary

5. Cancelled Cheque Book of Beneficiary

6. FIR or Police Report

7. Post-Mortem Report

1. Coverage Amount 

First and foremost is the coverage amount. Check if the coverage amount is aligned with your requirements. Check the risks you are trying to cover and the highest medical costs that might arise if you have an accident. 

Thus, the coverage amount should be sufficient to meet the financial needs of your family in case of your unfortunate demise due to an accident. Also, consider factors such as your income, debts, and other financial obligations while selecting the coverage amount.

2. Premium

The premium amount for the accidental death benefit rider should be affordable, aligned with your requirements and must not put a strain on your finances. 

Compare the premium rates offered by different insurers for your required sum assured and choose the one that provides the best value for money.

3. Exclusions

The list of exclusions is another must-check factor before buying the accidental death benefit rider or any insurance.

Carefully read the terms and conditions of the rider and understand the exclusions. See if your requirements align with the rider's terms and conditions. 

4. Coverage

5. Claim Process

The claim process should be simple and hassle-free so that your family does not have to run from pillar to pole to get their claim settled when they are already dealing with emotional turmoil. 

Look for an insurer with a good track record in settling claims quickly, efficiently, and hassle-free.

An accidental death benefit rider can be a valuable addition to a life insurance policy, providing additional financial protection in case of accidental death. 

However, before buying this rider, it is crucial to evaluate several factors, as discussed above. By making an informed decision, you can ensure that your loved ones are taken care of in case of an unexpected accident, and you can enjoy the peace of mind that comes with knowing that your family's financial future is secure.