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Accidental Death Benefit Rider in Term 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 in Term Insurance?

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.

What is Considered as Accidental Death in Term Insurance?

In term insurance, 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.

Is It Necessary to Buy Term Insurance with Accidental Death Benefit Rider?

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

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

How Does Accidental Death Benefit Rider in Term Insurance Work?

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 in the case of an accidental death. Here is how it works:

Purchase the Rider

When you buy a term insurance policy, you can add an accidental death benefit rider with an additional premium, depending on factors like age, occupation, and the coverage you choose.

Accidental Death

If you die as a result of an accidental covered by the policy, your beneficiaries will receive the sum assured under your term insurance policy, plus the additional amount specified in the rider.

Benefit Payout

The payout is typically a lump sum amount that can be used to cover funeral expenses, debts or provide financial support to your family.

Features and Benefits of Accidental Death Benefits Rider in Term Insurance

An accidental death benefit rider in term insurance is an optional add-on to a life insurance policy that provides additional financial protection in case of accidental death. Here are some key features and benefits:

Minimal Documentation

Adding the accidental death benefit rider is easy. You don’t need a lot of paperwork or extra steps. Just fill out an application form when you buy your life insurance policy.

Enhanced Protection

Riders like the accidental death benefit give you extra coverage. They provide additional financial support in various situations, helping to protect your loved ones even more.

Financial Support

If the insured person dies in an accident, this rider pays a lump sum to the nominee (the person chosen to receive the money). It helps the family with immediate financial needs like bills, loans, or funeral expenses.

Quick Payout

If the insured person dies in an accident, the ADB Rider usually pays out quickly, providing much-needed financial help to the family during difficult times.

Tax Benefits

You can get a tax deduction for the premiums you pay for a life insurance plan under Section 80C of the Income Tax Act, 1961. You can add an accidental death benefit rider to your policy for extra protection, which also qualifies for a tax deduction.

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 

Life insurance policies have standard features, but riders allow customization based on your risk profile. If your job carries higher accident risks, an accidental death benefit rider can enhance protection. Depending on the insurer, it can be added at purchase or later, with flexible coverage options.

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.

What's Covered and Not Covered in Accidental Death Benefit Rider in Term Insurance

Whats Covered

Whats Not Covered

Whats Covered

A term insurance with accidental death benefit provides extra coverage for unexpected, non-health-related deaths. Insurance companies define “accident” as any injury caused by an unforeseen event unrelated to illness or natural causes that results in death. Coverages include:

Car or Traffic Accidents: Death due to a car accident or similar traffic incident is covered under the accidental death benefit rider.

Aeroplane Crashes: Death in an aeroplane crash is covered under the accidental death benefit rider.

Injuries from Falls: Death from an injury sustained in a fall is included in the accidental death benefit rider. Death caused by a firearm accident is covered under the accidental death benefit rider.

Fire Injuries: Death from injuries sustained in a fire is included in the accidental death benefit rider

Whats Not Covered

Though term insurance with 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, majorly, the death should not be caused by an accident due to:

Self-inflicted injuries, including suicide attempts, are irrespective of mental health status.

Deaths related to the consumption of drugs, alcohol, or other substances.

Deaths occur as a result of war or invasion, even in the absence of an official war declaration.

Flying, except when you are a fare-paying passenger on a commercial airline or serving as a member of the airline’s crew.

Deaths arising from involvement in illegal or criminal acts.

Deaths during participation in professional sporting events or hazardous activities such as diving, horseback riding, or underwater pursuits.

Additionally, any exclusions outlined in the standard life insurance policy document

Understanding Term Insurance with Accidental Death Benefit Rider with Illustration

Let us take the example of Mr. Rohan.

Rohan, a 30-year-old, takes a one crore term insurance for 30 years of policy tenure, and his wife is the nominee for this policy. Rohan also adds an ADB rider that promises an additional ₹20 lakhs if he dies due to an accident.

Criteria	Details
Policy Term	30 years
Age of Insured	30 years
Sum Assured	₹1 crore
Premium Payment	Annual
Add-Ons	Accidental Death Benefit
Annual Premium	₹15,000 (approx.)
Maturity Benefit	NA (as it is a pure-term plan)

Some Relatable Real-Life Examples of Accidental Death Benefit Rider

Scenario 1

Scenario 2

Scenario 3

Natural Death During the Policy Term

If Rohan passes away during the 20-year term of the policy, his nominee will file a claim with the insurance company. After successfully processing the claim, Rohan’s nominee would receive the sum assured of ₹1 crore, which would help them cover living expenses, pay off debts, or invest for future needs.

Accidental Death During the Policy Term

If Rohan met with a road accident when he was 40, his hospital expenses would amount to around 18 lacs. Unfortunately, his death occurred, and then his beneficiary will be paid a total death benefit of ₹1.2 crores, that is ₹1 crore from the term plan and ₹20 lacs from the accidental death benefit rider.

Outliving the Policy Term

If Rohan outlives the 30-year term of the policy, the term plan typically does not provide maturity benefits, meaning he would not receive any payout.

Frequent Travelers

Individuals who often travel, especially to high-risk areas, must buy an accidental death benefit rider to ensure extra protection.

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.

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.

Regular Commuters

People who commute regularly for long distances, especially on two wheelers, must consider adding this rider to their life insurance policy.

Young Adults

A Terminal Illness Rider, also known as the Accelerated Death Benefit Rider, ensures the sum assured is paid upon diagnosing a terminal illness. It alleviates financial stress during treatment and allows the policyholder to arrange finances, medical support, or travel before death.

Sports Enthusiasts

Those who participate in recreational activities with higher risks, like skiing, rock climbing, or motorcycling, might find this rider beneficial.

Business Owners

If you own a business, an accidental death benefit rider can provide additional funds to help keep the business running smoothly in your absence.

Factors to Consider when Buying Accidental Death Benefit Rider in Term Insurance

Here is a list of significant factors to consider while purchasing an accidental death benefit rider:

Coverage Amount : First and foremost is the coverage amount. Check if the coverage amount is aligned with your requirements. You can use a term insurance calculator to get a better understanding of the appropriate coverage for your needs. Check the risks you are trying to cover and the highest medical costs that might arise if you have an accident.
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.
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.
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.

Eligibility Criteria for Buying Accidental Death Benefit Rider in Term Insurance

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

Criteria	Details
Age	Typically ranges from age 18 to 65 years
Insurance Policy	Must have a base life insurance policy
Health Requirements	No pre-existing medical conditions or disabilities at the time of purchase
Citizenship	Indian

Documents Required for Buying Term Insurance with Accidental Death Benefit Rider

Here is the list of common documents required to purchase a term insurance with accidental death benefit rider:

Identity Proof

Age Proof

Address Proof

Income Proof

Photographs

Medical Reports

Step to Purchase Accidental Death Benefit Rider to Term Insurance

Adding an Accidental Death Benefit Rider to your term insurance policy typically involves the following steps:

Review Your Policy for Rider Eligibility

Check if your existing term insurance policy allows for the addition of riders.

Contact Your Insurance Provider

Reach out to your insurance provider to express your interest in adding the rider.

Complete and Submit Required Documents

Complete any necessary forms provided by your insurer and submit any additional documents that may be required, such as proof of identity and medical reports.

Pay the Additional Premium

Riders usually come with an extra cost, so be prepared to pay an additional premium.

Receive Confirmation

Once approved, you will receive confirmation from your insurer that the rider has been added to your policy.

Documents Required for Claiming Term insurance with Accidental Death Benefit Rider

Here is the list of most common documents required to claim a term insurance with accidental death benefit rider:

Claim Form

Death Certificate

Policy Document

Identity Proof of Nominee

Address Proof of the Nominee

Medical Reports (if applicable)

Bank Account Details

Additional Documents

What are the Pros and Cons of Accidental Death Benefit Rider in Term Insurance?

Understanding the pros and cons of an Accidental Death Benefit (ADB) rider in term insurance is essential for making informed decisions. Here are some pros and cons to consider:

Pros	Cons
Provides extra protection for beneficiaries, especially for primary breadwinners.	Doesn’t provide extra payout for deaths from natural causes or illness.
Costs less than standalone policies and adds coverage for a small fee.	Only covers accidental deaths, excluding natural causes or illnesses.
Often available without a medical exam.	Many policies exclude certain accidents, such as those during dangerous activities or under the influence.
Offers a lump sum to help cover expenses after an accident.	Some insurers may not offer this rider for high-risk occupations.
Some policies provide double or triple indemnity for accidental death.

Tax Benefits of Term Insurnace with Accidental Death Benefit Riders in India

The Accidental Death Benefit rider can offer some tax benefits in India. Here are the key points:

Tax Exemption on Premiums

Premiums paid towards the Accidental Death Benefit rider qualify for tax exemptions under Section 80D of the Income Tax Act, 1961. This means you can deduct the amount paid for this rider from your taxable income, reducing your overall tax liability.

Tax-Free Payouts

The payout received from an Accidental Death Benefit rider is generally not considered taxable income under Section 10(10D) of the Income Tax Act. This means that if the benefit is paid out due to an unfortunate accident, the amount received by the beneficiaries is usually exempt from income tax.

Difference Between Death Benefit and Accidental Death Benefit in Term Insurance

A term insurance policy pays out money when the policyholder dies, no matter the cause. An accidental death benefit, however, only pays out if the death is due to an accident. If you have an accidental death benefit rider and die from natural causes or illness, this extra coverage won't apply.

But if you die from an accident, such as a car crash or a fall, your beneficiaries could get double the policy's amount, often called "double indemnity." Understanding these differences helps you choose the right coverage for your loved ones.

An accidental death benefit rider is a valuable addition to a term insurance policy, especially for individuals who are exposed to higher risks of accidents due to their occupation or lifestyle. This rider provides an additional payout to the beneficiary in case the policyholder dies due to an accident.

While it requires an additional premium and often has age limits, the ADB rider can significantly ease the financial burden on families by covering immediate expenses like funeral costs and debts. By carefully considering their needs and the terms of the rider, individuals can make an informed decision about whether this additional coverage is right for them.

FAQs about Accidental Death Benefit Rider in Term Insurance

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Can you provide an example of how an accidental death benefit rider works in term insurance?

If a policyholder has a term insurance policy of ₹500,000 and an accidental death benefit rider worth ₹200,000 and dies in a car accident, the beneficiaries will receive the base policy amount of ₹500,000 plus an additional ₹200,000 from the accidental death rider. This provides a total payout of ₹700,000, helping cover financial obligations more comprehensively.

What advantages does accidental death insurance offer in term insurance?

Accidental death benefit in term insurance offers several advantages, including affordable premiums, additional financial protection in case of an unexpected accident, and peace of mind for individuals who engage in risky activities.

It ensures that beneficiaries receive extra financial support to cover expenses like medical bills, mortgages, or education, alleviating financial burdens during a difficult time. It’s particularly useful for those with high-risk jobs.

What is an accidental income benefit rider in term insurance?

An accidental income benefit rider provides a regular income to the beneficiaries or policyholder in the event of a covered accident that results in death or disability. This rider helps replace the insured’s lost income by paying a monthly benefit for a specified period ensureing that dependents continue to receive financial support, making it useful for individuals who rely heavily on their regular income.

Is the coverage amount of an accidental death benefit rider in term insurance taxable?

No, the coverage amount received from an accidental death benefit rider is tax free under section 10 (10D) of the income tax act, as per the prevailing tax norms.

What is the difference between accidental death benefit rider and basic term insurance plan?

Basic 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 in term insurance?

The premium for an accidental death benefit rider depends on various factors like health, age, lifestyle etc. However, it’s quite affordable and can be added to the base policy for a nominal premium.

Can I claim from two accident insurance policies?

Yes, if you are covered under multiple policies, you can claim from all of them. Most policies do not come with a restriction on the number of claims that can be made.

Is there an age limit for buying the accidental death benefit rider in term insurance?

Yes, with most insurers the entry age for ADB rider ranges from 18-65 years of age, typically the same as the base life insurance policy.

How much does an ADB Rider cost in term insurance?

The cost of an ADB Rider varies by insurer, policyholder's age, health, and the amount of coverage. However, it's a nominal cost over your base premium.

Is an term insurance with accidental death benefit rider a good fit for me?

Yes, Before buying an ADB rider, you need to evaluate your lifestyle and requirements. An ADB Rider is suitable if you seek extra protection against accidental death, at a nominal cost.

What does an accidental death benefit rider cover in term insurance?

An Accidental Death Benefit Rider covers death due to accidents, thus enhancing the base policy’s death benefit.

What is the limit of accidental death benefit rider in term insurance?

The limit of ADB rider depends on the policy and the insurer. It is usually a certain multiple of the base policy’s coverage.

Should we take an accidental rider with term insurance?

Yes, adding an accidental death benefit ride to the term plan is a wise decision since it covers the additional cost of accidental death, which brings along heavy hospital and treatment expenses before the death.

Can an accidental death rider increase the death benefit in term insurance?

An ADB rider can provide extra death benefit in case of accidental death, thus enhancing the coverage. However, it does not increase the base death benefit.

What is the difference between death benefit and accidental death benefit in term insurance?

The death benefit is the amount paid upon death; the accidental death benefit is an additional amount paid for accidental death.

What is the claim period for an accidental death benefit rider in term insurance?

The claim period for an accidental death benefit rider is 180 days from the date of accident.

What is considered accidental death for insurance purposes in term insurance?

According to insurers, an accidental death is defined as any sudden death strictly resulting from an accident like car crash, choking, drowning, machinery etc. For the purpose of insurance, the time limit defined for this death is 180 days from the date of accident.

Is there any government benefit for accidental death in term insurance?

Yes, Pradhan Mantri Suraksha Bima Yojna (PMSBY) provides accidental death coverage of Rs. 2 lakhs for an annual premium of Rs. 12. The scheme covers accidental disabilities and deaths including the ones from murder and natural calamities, but not suicide.

Who is the beneficiary for accidental death benefit in term insurance?

A beneficiary is the person who receives the proceeds from accidental death benefit in case the policyholder dies due to an accident.

What are the exclusions of an accidental death benefit rider in term insurance?

Accidental death benefit riders often exclude certain situations, such as death resulting from self-inflicted injuries, suicide, participation in hazardous activities like skydiving or racing, war, or intoxication. In addition, deaths that occur due to natural causes, pre-existing medical conditions, or illegal activities are also excluded.

Is purchasing an accidental death benefit rider a worthwhile investment in term insurance?

Purchasing an accidental death benefit rider can be a worthwhile investment for individuals who have high-risk occupations or lifestyles. As it offers additional financial security ensuring that beneficiaries receive enhanced protection. However, its depends on individual circumstances, risk exposure, and financial goals.

What are the key reasons to consider investing in an accidental death benefit plan in term insurance?

Key reasons to invest in an accidental death benefit plan include added financial protection in case of an unexpected accident, affordability compared to other coverage options, and peace of mind for individuals with high-risk jobs or activities.

This plan ensures that beneficiaries receive a larger payout to cover financial obligations, such as debts, education, or family support, if an accidental death occurs.

Is there a difference between Accidental Death Benefit (ADB) and Accidental Death and Dismemberment Insurance (AD&D) in term insurance?

Yes, Accidental Death Benefit (ADB) provides a payout solely in the event of accidental death. On the other hand Accidental Death and Dismemberment Insurance (AD&D) offers compensation not only for accidental death but also for injuries leading to dismemberment, such as the loss of limbs, sight, or hearing.

How frequently can one claim insurance under term insurnace with accidental death rider?

An accidental death rider typically provides a one-time payout to beneficiaries if the insured dies due to an accident. Since the rider is linked to the insured's death, it can only be claimed once per policy. However, if the policyholder survives the accident but sustains severe injuries, some policies with dismemberment or injury clauses may offer partial benefits.

Do term insurance and health insurance offer the same type of accidental coverage?

No, term insurance and health insurance offer different accidental benefits. Term insurance pays a lump sum on accidental death, often via an added rider. Health insurance covers medical expenses from accidents, including hospitalisation and treatment. Both are complementary and serve distinct financial protection purposes in case of accidents.