What is accidental death benefit rider?

Life insurance offers many options and add-ons that make the policy more meaningful to the policyholder. Add-ons or riders as they are also called allow the policyholder to customize the policy to suit specific needs

One such add-on is in the accidental death benefit rider.

Why accidental death benefit rider?

How often do we see a family’s finances come under tremendous stress because the primary breadwinner met with an accident? Treating the accident involves considerable expense and if it turns out to be fatal, the family must also deal with loss of life and future income. The double jeopardy of medical expenses and permanent loss of income from the death of the breadwinner can be financially as also emotionally devastating for the family.

This is where the accidental death benefit rider can prove beneficial.

How the rider benefits you

The rider safeguards the family from accidents / mishaps resulting in death which can impair the family’s income for several months or even years.

In an event of death, the insured gets additional amount - usually twice the sum assured.

Illustration

Let us understand with the help of an illustration how the accidental death benefit rider works.

Deepak is 26 years old,employed with a private firm. He is married with a child; his wife is a homemaker. The family gets by on Deepak’sincome – annual salary of Rs 3,60,000 (Rs 3.6 lakhs).

Deepak has a life Insurance policy of Rs 25 lakhs. He has taken an accidental death benefit rider. He thought it necessary to go for the specific rider because he usually commutes on his motorcycle. Also given the income needs of the family the Rs 25 lakhs policy is insufficient at present, but that is the best he can afford under the circumstances. So the accidental death benefit rider supplements the sum assured on the primary policy so to speak.

Due to an unfortunate incident on the way to work, Deepak meets with a serious accident. Matters take a turn for the worse, when his condition deteriorates sharply. Eventually, all medical efforts to revive his condition prove unsuccessful and the family loses Deepak to the accident.

The medical bills, including the many tests, surgeon’s feesand hospitalization bills amount to over Rs 10 lakhs. The family claims the insurance on Deepak’s demise. The death proceeds amount to Rs 50 lakhs thanks in large part to the accident death benefit rider. With the rider, they can claim twice the sum assured.

Without the accidental death benefit they were entitled to claim only Rs 25 lakhs. With Rs 10 lakhs gone towards the medical fees, the family would have been left with a paltry Rs 15 lakhs.

The rider can be attached to any policy

The accidental death benefit rider can be attached to any life insurance plan be it term plans, endowment plans, unit-linked plans (ULIPs) or money back plans.

Exclusions

There are certain exclusions to the rider. This means that death caused by certain events like acts of war, illegal activities and hazardous hobbies, among others, do not qualify for the benefits under the rider. Also, there may be age limits to avail of the benefits attached to the rider – for instance, the rider may not apply to the policyholder once he reaches the age of 70 years.