The Importance Of Accidental Death Benefit Riders In Term Insurance

We all dream big! We have high hopes for our future and dedicate every single day to heading towards it. With every small step, you are excited to see them come to life. But sometimes, life can give you unexpected twists that can topple all that you build. Just imagine. Riya was getting ready for a weekend getaway with her husband, Hitesh. Just then, her phone rang with some unexpected news. He had just been in a car accident. Though he was okay, it got Riya thinking. What if the accident had been worse?

Hitesh had recently added an accidental death benefit rider to his term insurance policy. This meant that in case of a fatal accident, his family would receive an extra sum of money, apart from his base sum assured. This rider was like an added layer of safety, just in case the unexpected happened. But why would Hitesh, or anyone for that matter, choose to add this extra protection? How can it transform your insurance plan from good to great?

We have all the answers for you! So, come join us in finding out why these riders are just the solution you need!

Do You Need An Accidental Death Benefit Rider With A Term Plan?

You might be confused if you really need to add a rider to your already robust term insurance plan. It really comes down to your unique situation and long-term goals.

Here’s how you can find out if you need this rider -

• If your current insurance plan already has you covered and ticks all the boxes for adequate coverage, you might not need that extra rider.
• But, if you have any gaps in your coverage or if you are thinking about enhancing your financial security just in case the unexpected happens, then the ADB Rider could be a brilliant choice.

So, now we are about to explain all about riders to you.

Intrigued? Scroll a bit-

What Are Term Life Insurance Riders?

Think of riders as customisable features that help you tailor your term insurance policy to fit your unique needs. We all know that each person has different requirements, and term insurance understands that. That is why it offers a range of optional benefits called riders.

However, riders aren’t free. They come with an additional premium. By adding riders, you can get extra protection and benefits that go beyond the standard payout if something happens to you.

And guess what?

Depending on which insurance company you are choosing, you get to pick from a whole lot of riders to supercharge your term insurance plan.

Some of the most popular riders available with insurance plans are - Critical illness riders, Accidental death benefit riders, Accident disability riders, Waiver of premium due to critical illness, Surgical care riders, etc.

Note: Term insurance plans might offer other types of riders, depending on the insurer. Thus, before you seal the deal on your policy, take a flip through all those important documents.

When it comes to term insurance, you have the power to pick riders that fit your and your family’s unique needs like a glove. And guess what? Adding a rider is as easy as pie. You don’t need to have to go through extra documentation or medical tests other than what you already did for your base term insurance policy.

Understanding The Accidental Death Benefit Rider

The accidental death benefit rider (ADB Rider) is a really cool upgrade you can add to your term insurance policy.

So, how does it help you actually?

If an accident leads to your unforeseen demise while the rider is active, the ADB rider gets activated. It doesn’t just stick with your basic coverage; it adds an extra lump sum of money on top of what you already have. In short, this rider ensures that your dear family gets enhanced financial support if something were to happen by accident.

Let’s look at an example to make it clearer -

Imagine Dharshini buys a term insurance policy for Rs. 1 Crore for a policy duration of 25 years. She adds an accidental death benefit rider worth another Rs. 1 Crore to her policy. Unfortunately, during the policy period, she meets with an accident and bites the dust on the spot.

In this situation, her nominee would receive a total payout of Rs. 2 Crores. How?

The total claim amount comprises of Rs. 1 Crore from the term insurance and another Rs. 1 Crore from the accidental death benefit rider. So, with the rider, the coverage increases in case of an accidental death.

Here's an important detail to keep in mind - once the rider sum assured is paid out, the rider will come to an end.

So, what does that mean? It denotes that the accidental death rider offers benefits only if you pass away immediately or within a certain period following an accident. This period is typically 180 days.

But what happens if you are involved in an accident but don’t pass away immediately or within this period?

In such a case, your family might not receive the accidental death benefits. However, your term insurance will still pay out if you pass away by the end of the policy term.

Also, a quick note- Insurers usually have stricter rules on the causes of death. They require that the death be accident-related to qualify for the rider benefits.

This rider is subject to certain exclusions. To avoid any surprises down the road, it is super important to know what the ADB Rider doesn’t cover. Hence, check the fine print to make sure there are no hidden twists!

Also, there are a few catches -

• The rider won’t provide benefits if the cause of death is from an illness or infection that wasn’t caused by an accident.
• It also doesn’t provide coverage for situations involving suicide, attempted suicide, or self-inflicted injuries (except in the first year).
• Also, if the death is related to criminal or illegal activities, or if it happens during war, acts of terrorism, invasion, or civil unrest, the rider won’t cover those either, and so on.

For example, let’s consider Dharshini’s scenario again -

Dharshini has a term insurance plan with a sum assured of Rs. 1 Crore. She also pairs it with an accidental death benefit rider of another Rs. 1 Crore. A few months later, Dharshini passes away due to a heart attack. In this scenario, her insurer will only provide the death benefit of Rs. 1 Crore. This is because Dharshini’s cause of death was not due to an accident.

Why Should You Invest In An Accidental Death And Dismemberment Rider?

An accident can drain you both emotionally and financially. Adding an Accidental Death and Dismemberment (AD&D) Rider can give you that extra peace of mind.

Here’s the difference -

The AD&D Rider improves the basic coverage of a standard term insurance policy. Not only does it provide benefits in the event of an accidental death, but it also helps with significant injuries caused by accidents.

If you are injured in an accident and lose your legs, eyesight, hearing, or other essential body functions, you are covered by the AD&D Rider. Because these injuries can result in high medical costs and income loss due to disability, having this additional layer of insurance can be highly useful.

The AD&D rider provides the funds needed to cover recuperation expenses, medical treatment, and any ongoing expenses that may add up. Now, even if you have a good term insurance policy, there may be occasions when it is insufficient, particularly because of income-related limitations. For instance, if you require more coverage than what your policy limits allow, an AD&D rider can help bridge that gap. By including this rider, you increase your coverage and provide your family with a larger financial compensation in the case of an unintentional death or serious injury.

The best thing, then?

It is quite reasonably priced. For this additional protection, you just need to pay a little premium on top of your regular policy cost. Considering how uncertain life may be, purchasing the AD&D rider assures that you are taking all necessary precautions to protect your family's future.

What Are The Advantages Of A Term Insurance Plan With Death Benefit?

Here are some benefits that you can enjoy by adding these riders to your term insurance -

• Boosted Financial Safety Net
  The biggest win with an ADB rider is the extra layer of financial security it adds. This rider kicks gives an additional payout apart from your term insurance plan's basic death benefit. However, it is applicable only if an accident results in a sudden passing. An additional sum can help cover immediate expenses, clear any outstanding debts, and ensure future financial stability for your family. In tough times, this financial cushion can be a real lifesaver.
  
  

• Flexibility At Its Best
  Here's where you get the choice - you get to decide how much coverage you want for your ADB Rider. This way, you can select the option that matches your needs and budget, both. Every rider comes with its own lower and upper limits on the sum assured, but you have the freedom to pick any lump sum amount within that range. This level of customisation will suit your lifestyle, your job, and your risk factors.
  
  

• Easy On The Wallet
  The affordability of including an ADB Rider in your insurance policy is one of its biggest features. It doesn't require you to spend a lot of extra money. You may enjoy big benefits by adding a tiny sum to your standard premium. This makes it a clever and cost-effective way of enhancing the protection that your term insurance policy provides. You can maximise your coverage without feeling broke because it is so reasonably priced. As a result, you have additional assurance without seeing a significant rise in your premium costs.
  
  

• Ultimate Peace Of Mind
  You may be stressed about the unpredictability of life at times. But guess what? You can breathe easier knowing your term insurance plan now includes an ADB Rider. With this extra layer of assurance, you don’t have to fret about those unexpected events and their financial fallout. Instead, you can focus on living your best life.
  So, take a deep breath, unwind a little, enjoy every moment, and allow the ADB Rider to handle “the what-ifs”.
  
  

• Enjoy Dual Tax Benefits*
  Just like a standard term insurance, the ADB rider brings some cool tax perks*. If you fulfil all requirements, you can benefit from tax benefits* as mentioned under both Sections of 80C and 10(10D)** of the Income Tax Act, 1961.
  The good news is that Section 80C allows you to deduct the premiums you pay for the accidental death benefit rider from your taxes. In addition, Section 10(10D)** exempts the claim amount you receive under this rider from taxes. Hence, you also save taxes while receiving additional protection.

Should You Buy A Death Benefit Rider?

The answer depends on your personal requirements and financial objectives. To determine whether or not to add a death benefit rider, you need to assess your coverage gaps and individual needs to make the final call. Let’s dissect it further below-

A standard term insurance policy covers all types of death, pretty much anywhere in the world. The only exception is suicide within the first year of buying the policy. That means if an accident happens, whether at home, while driving, or during adventurous activities, your term insurance has you covered!

So, you might be asking yourself: “Do I really need an extra layer of protection with an ADB rider?”

When The Rider Makes Sense?

At first, it might seem like having extra accidental death coverage is a bit much. But hang on! There are actually some pretty smart reasons to consider adding this rider to your plan. Sometimes, your term insurance policy might have a cap on how much coverage you can get based on your income. If you think that you cannot quite get the full coverage you want, the ADB Rider can bridge that gap. It enhances your protection without having to stretch your budget too thin.

For instance,
Say you wanted to purchase a term insurance policy with a cover amount of Rs. 2 Crores. However, due to eligibility constraints, you can only secure a term insurance cover of Rs. 1.5 Crores. In this situation, adding an ADB rider for Rs. 50 lakhs can help you match up to that amount. If an accident were to occur, this rider ensures that your family gets an additional payout, bringing your total coverage closer to what you originally aimed for. Boosting Your Protection

You can smartly fill in some of the gaps between your desired coverage and your financial situation by considering the accidental death benefit rider. It functions similarly to an additional financial cushion to make sure your family has a larger safety net in the sad case of an unintentional death.

In A Nutshell,

Adding an extra accidental death benefit rider to your term insurance is like having a safety net under a high-wire act. Just like a stunt double ensures Tom Cruise stays safe during risky scenes, this rider protects your family from unexpected financial falls. It's a small step for you but a giant leap for their security.

Imagine if Iron Man himself, Tony Stark, had an accidental death benefit rider. Even superheroes face unexpected dangers. And for us mere mortals, this additional rider in term insurance is crucial. It gives extra financial support to loved ones if the unthinkable happens. It is like having a safety net in a high-wire act. So, be a hero for your family and consider adding that rider to your insurance. Peace of mind is the ultimate superpower!