Simplifying Life Insurance in India
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.
What is 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.
What is Considered as 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.
How Does Accidental Death Benefit Rider Work - with an Example?
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.
How Accidental Death Benefit Rider is Different from Term Insurance?
Both accidental death benefit rider and term insurance are two different products. Accidental death benefit is mostly offered as a rider above the base policy of term insurance. Other major points of difference between the two products are:
| Point of Difference | Accidental Death Benefit Rider | Term Life Insurance |
| Coverage | Pays out only if the insured dies because of an accident, as defined by the policy. | Provides death benefits if the insured dies within the policy term, regardless of the cause of death. |
| Duration | Purchased as an add on the base policy for the duration of the base policy or lesser time. | Purchased as a base policy for a specific term, such as 10, 20, or 30 years. |
| Purpose | Provides extra financial protection in the event of accidental death, often to cover unexpected costs like medical bills. | Designed to replace the income of the deceased and support the beneficiaries financially. |
| Cost | Nominal cost added to the base policy premium | Generally, more expensive than accidental death benefit policies, as it covers a broader range of cases. |
Benefits of Accidental Death Benefit Rider
Some of the major benefits of an accidental death benefit rider are:
Additional Coverage for Unforeseen Events
An accidental death benefit rider provides additional coverage to the policyholder's family in case of an untimely death due to an accident.
Since accidents might bring unexpectedly high medical costs with them, this rider ensures that the family is provided with an additional lump sum amount to help them cope with the medical expenses.
Affordable Premiums
The accidental death benefit rider is available at an affordable premium rate. It can be purchased as an add-on to the base policy for a nominal extra premium and is a cost-effective way to add an extra layer of protection to your life insurance policy.
Flexibility
While base life insurance policies have uniform features for all, riders are a flexible and effective solution to customising your policy as per your risk profile and requirements. If you are in a risky work profile and more prone to accidents, you can consider adding an accidental death benefit rider to your life insurance policy.
Depending on the insurer's terms and conditions, it can be added at the time of policy purchase or later. The coverage amount can also be customised as per your requirements.
Peace of Mind
Adding an accidental death benefit rider to your life insurance policy can give you peace of mind, knowing that your family will be taken care of in case of an accidental death.
We usually plan our insurance coverage after evaluating a lot of factors. That sum assured is meant to take care of the dependents' financial goals and other liabilities in case of your untimely demise.
However, in case of accidental death, the extra medical expenses might hit your coverage plan.
Thus, an accidental death benefit rider can help reduce the financial burden on your family, keeping your well-planned life cover safe for their other needs.
What are the Exclusions of Accidental Death Benefit Rider?
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:
- Suicide or self-inflicted injuries due to any reason.
- Engaging in any criminal or illegal activities.
- Adventure sports that might pose a life threat.
- Substance Abuse or Drug Overdose.
- War that is declared or not or civil commotion.
Who Should Buy an Accidental Death Benefit Rider?
1. Frequent Travelers
Individuals who often travel, especially to high-risk areas, must buy an accidental death benefit rider to ensure extra protection.2. High-Risk Job Holders
People working in hazardous environments, such as construction or mining, should consider this rider for added financial security in case of any unfortunate accident.3. Primary Breadwinners with Dependents
If you're the primary breadwinner and have dependents, this rider can provide additional financial support to your family in the unfortunate event of your accidental death.4. Regular Commuters
People who commute regularly for long distances, especially on two wheelers, must consider adding this rider to their life insurance policy.Eligibility Criteria for Buying Accidental Death Benefit Rider
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.
Documents Required for Claiming Accidental Death Benefit Rider
1. Duly Filled Claim Form
The beneficiary must submit a claim form, fully completed, to initiate the process. It serves as the formal claim request to the insurer.2. Death Certificate
An official death certificate issued by the local municipal authority is required to confirm the cause and fact of death.3. Policy Document
The original policy document is needed to verify the coverage details and the accidental death benefit rider.4. KYC Documents of Beneficiary
Valid identification and address proofs of the claimant must be presented to establish their identity and relationship to the policyholder.5. Cancelled Cheque Book of Beneficiary
A cancelled cheque book or passbook copy would need to be submitted to establish bank details where the payout would be received.6. FIR or Police Report
For accidental deaths, a First Information Report (FIR) or police report is essential to confirm the accident details.7. Post-Mortem Report
If applicable, a post-mortem report helps in ascertaining the exact cause of death, crucial for accidental death claims.Factors to Consider When Buying Accidental Death Benefit Rider
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
Understand the definition of accident as per the insurer so that you are entirely aware of the cases when you will receive benefits. You must be aware of the coverage that your rider provides, and all cases that it covers. Check if the same is aligned with your lifestyle and requirements.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.
FAQs About Accidental Death Benefit Rider
Is the coverage amount of an accidental death benefit rider taxable?
What is the difference between accidental death benefit rider and term insurance?
Term insurance provides financial protection to your family in case of your death, whether due to natural causes or accidental.
Accidental death benefit, on the other hand, provides additional financial protection in case of your accidental death.
How much does an accidental death benefit rider cost?
Can I claim from two accident insurance policies?
Is there an age limit for buying the accidental death benefit rider?
How much does an ADB Rider cost?
Is an Accidental Death Benefit Rider a good fit for me?
What does an Accidental Death Benefit Rider cover?
What is the limit of accidental death benefit rider?
Should we take an accidental rider with term insurance?
Can an accidental death rider increase the death benefit?
What is the difference between death benefit and accidental death benefit?
What is the claim period for an accidental death benefit rider?
What Is Considered Accidental Death for Insurance Purposes?
Is there any government benefit for accidental death?
Who is the beneficiary for accidental death benefit?
What is the new act for accident in India?
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Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
