Accidental Term Insurance

Accidents happen when we least expect them, often catching us off guard. In the blink of an eye, they can shatter dreams, afflict pain, and leave everlasting scars. During 2021, more than 4 lakhs accidents have been reported in India, resulting in the loss of around 1.5 lakh lives and causing injuries to more than 3.8 lakh people.¹ These statistics paint a grim picture of the physical and emotional toll accidents take on individuals and their families.

Not only that, but accidents can also cause severe financial consequences too. A study revealed that a staggering 73.2% of road accident victims had to spend 10 to 11 times their monthly income to bear the medical expenses incurred due to accidents.² Such financial burdens can be overwhelming, especially when combined with the emotional turmoil victims and their families go through in such troubled times.

In the face of these challenges, accidental benefit in term insurance promises a ray of hope. It provides an efficient way to safeguard yourself and your loved ones from financial hardships in case of accidental death or disability. In this article, let us explore how it provides a safety net during difficult times.

What Is Term Insurance?

Term insurance is a simple and effective solution to safeguard your family's financial future. By investing in it, you provide an ally for your loved ones that ensures they are financially protected if something unfortunate happens to you during the policy period.

The insurance company will provide your family with a sum of money, known as the 'sum assured', in the event of your passing away when your term insurance plan is active. This amount replaces your income and helps your family maintain their financial stability without having to compromise on their dreams and lifestyle. They receive this amount on the basis of the claim payout option you select while purchasing the policy.

Term insurance is a pure risk cover. This means that if you survive until the end of the policy term, you will not be entitled to any benefits.

Is Accidental Death Covered In Term Insurance?

Term insurance policies in India cover all types of death, including accidental deaths caused by road accidents, accidents while travelling by air, etc. The only exception is death by suicide within the first year of policy purchase.

So, if you pass away because of an accident, your term insurance plan will provide your loved ones with a payout, so they can live a stress-free life. Now, in case you work in a job where the risk of accidents is higher, it is important to consider getting extra coverage to protect yourself and your loved ones financially. The best way to do this is by purchasing additional benefits, known as riders, along with your term insurance policy. They give you extra protection in specific situations.

There are various types of riders available in the market, such as critical illness riders, waiver of premium riders, etc. Out of these, two riders are specifically designed to financially protect you against accidents -

1. Accidental Death Benefit Rider

The accidental death benefit rider is an add-on feature that provides an additional sum assured if you pass away due to an accident during the policy term. It ensures that your nominee receives an additional payout, known as the ‘accidental death benefit’, on top of the basic coverage provided by the term insurance policy. You can also opt for this rider if you’re not eligible to buy sufficient cover amount for your family. To get an accidental death insurance policy, all you need to do is pay an additional premium.

2. Accidental Disability Rider

A disability, much like a critical illness, can create significant financial challenges for a family, sometimes even more than the death of the primary breadwinner of a family. Apart from the loss of income, additional medical expenses may arise due to disability, such as modifying the home with ramps to make it more accessible along with other alterations as well as medical expenses which are/may not be covered/adequately covered by medical insurance. These increased costs can further strain the family's finances.

This is where the accidental disability rider steps in. It provides financial protection for individuals who become permanently disabled due to an accident.

It is important to note that the definition of ‘permanent disability’ may vary among insurance companies. For example, an insurance company may define permanent disability as the inability to perform three out of six daily activities, such as writing, climbing, or lifting. Another insurer may define it as an injury resulting in the loss of core functioning of a body part, such as the loss of both eyes, both feet, one arm and one leg, and so on.

Thus, before purchasing the rider, you must carefully review the policy terms and conditions to ensure you fully understand the scope of coverage.

Who Should Opt For These Riders?

Each rider offers different additional benefits, and their relevance may vary based on individual needs and goals. Therefore, make sure the rider you choose aligns with your specific financial circumstances and your current life stage.

While accidents are unexpected events that can affect anyone and it is essential for everyone to have a rider as it can ensure an extra layer of financial stability, it becomes even more important for you if any of the following conditions apply to you -

• You Are A Professional Requiring Extensive Driving Or Travel If your profession involves frequent driving or extensive travel, opting for such riders is especially important. The higher your exposure to the road or air travel, the greater the risk of accidents.

• You Work In A High-Risk Area Certain professions or industries, such as construction, mining, or aviation, have a higher likelihood of accidents. If you work in such a high-risk occupation, it is essential to consider riders that provide coverage for accidents.

• You Engage In High-Risk Activities If you participate in activities that carry an increased risk of accidents, such as extreme sports, adventurous activities, or dangerous hobbies, having riders in place is essential.

Even if your job is not risky or you don't travel a lot, accidents can still happen to anyone. If you are the family's sole breadwinner and they rely on you financially, it is important to seek professional advice on whether it's a good idea to add extra coverage to your term life insurance policy.

Conclusion

Accidents can have devastating consequences, affecting not just your life but also the financial stability of your loved ones. To avoid this from happening, term insurance provides you with extra benefits - Accidental Death Benefit Rider and Accidental Disability Rider provides additional protection in case of accidents. However, before buying accidental term insurance, make sure to seek professional advice and assess the vulnerabilities of your loved ones to ensure you’re well-prepared no matter what life throws your way.

Sources
[1] https://morth.nic.in/sites/default/files/RA_2021_Compressed.pdf
[2] [https://ijetv.org/index.php/IJETV/article/download/983/619#:~:text=In%20one%20study%20done%20in,about%20%2420%20 billion(16).](https://ijetv.org/index.php/IJETV/article/download/983/619#:~:text=In%20one%20study%20done%20in,about%20%2420%20 billion(16).)