Most term life insurance policies cover accidental death if the policyholder has opted for accidental death rider. This rider ensures that if the insured person dies accidentally within the policy term, the death benefit will be paid to the beneficiaries. The coverage amount depends on the specific terms and conditions of the policy.
A term insurance plan is a life insurance policy that covers you for a certain period. It can last up to a certain term, decided by the policyholder. If you pass away during the tenure, your beneficiaries are entitled to a death benefit under the policy’s provisions.
Accidental death benefits are often added in term life insurance policies as a rider benefit. This means that if the insured person dies due to an unforeseen accident, the death benefit will be paid out to the beneficiaries. Some insurers offer an optional rider that can increase the death benefit payout specifically for accidental deaths. This can be a good option if you want extra protection for your loved ones in case of an accident.
Accidental Death Cover in Term Insurance
An accidental term insurance policy in India is one of the many benefits you can add to your term insurance plan. It covers predetermined damages specified in the policy agreement, such as amputation, fractures, burns, wounds, or disabilities. Accidental life insurance gives a lump sum payout known as an accidental death benefit to the beneficiary in the case of your demise.
Term Insurance with Accidental Disability Rider
Accidents do not come knocking at your doorstep. However, such unexpected occurrences bring ambiguity, losses, temporary or permanent disabilities, etc., with themselves. Therefore, it is sensible to get term insurance with an accidental disability rider if you want to gear up for the worst.
In case of an accident that results in disability, a lump sum payment or a monthly income for a certain period is given to you and your loved ones. This period is entirely based on the length of the policy and your financial requirements.
There are two situations for disabilities in an accidental death insurance policy:
Permanent Disability
Suppose you are no longer able to work or take care of yourself or your family due to permanent accidental disability. In that case, the rider benefit is given as compensation in a lump sum amount.
Partial Disability
If you experience a partial accidental disability where you are not completely incapable of taking care of yourself, term insurance with an accidental disability rider benefit pays the compensation amount monthly.
Do You Need an Accidental Insurance Policy?
Accidental death insurance, typically offered as a rider on term life insurance policies, provides an additional payout to your beneficiaries if you die in a covered accident. While not essential for everyone, it can be valuable for certain individuals facing higher risks or with dependents who rely on their income.
Some factors to consider to determine if accidental insurance is right for you:
High-Risk Occupations or Hobbies
Do you work in a hazardous construction, firefighting, or law enforcement field? Do you regularly engage in extreme sports or high-risk activities? If so, accidental death insurance can offer your loved ones valuable financial support in case of an unfortunate accident.
Dependent Family
Do you have financially dependent children, spouses, or elderly parents? If your income plays a critical role in their well-being, an accidental death benefit can guarantee their financial stability in your absence.
Existing Life Insurance Coverage
Do you already have a term life insurance policy? If so, check if it includes an accidental death rider. If not, adding one might be cost-effective compared to purchasing a separate accidental death policy.
Alternative Risk Mitigation Strategies
Consider your existing risk mitigation strategies. Do you have good health insurance and disability coverage? If so, this rider is a good option to ensure finances for your family.
Exceptions to Accidental Death Cover in Term Insurance
Even with an accidental death rider, certain situations might not be covered. It is crucial to understand these exceptions before opting for this coverage:
- Pre-existing Conditions: Injuries or illnesses existing before the policy is purchased or during the waiting period (if applicable) may not be considered accidental, even if they contribute to the death.
- Suicide or Self-inflicted Injuries: Accidental death benefits generally exclude death by suicide or intentional self-harm.
- War or civil unrest: Some policies exclude deaths from war, terrorism, or civil unrest.
- Criminal activity: Death caused by illegal activities like drunk driving or intentional criminal acts might not be covered.
- Act of God: Some policies might have exceptions for deaths caused by natural disasters or other ‘acts of God.’
How to Buy an Accidental Insurance Cover for Term Insurance?
To purchase accidental insurance coverage as part of your term insurance policy, you generally have a few options. Here’s a step-by-step guide for buying accidental insurance coverage:
Understand Your Needs
Assess your lifestyle, occupation, and other risk factors to determine the amount of accidental coverage you may require. Accidental insurance typically provides a lump-sum payout in case of accidental death or disability, and the coverage amount should complement your overall financial needs.
Select the Term Insurance Plan
Choose a term insurance plan that aligns with your life coverage requirements. Most insurance providers offer term plans with the flexibility to add riders or additional coverage, including accidental insurance.
Check Available Riders
Explore the riders or add-on options available with the chosen term insurance plan. Accidental insurance is often offered as a rider, allowing you to enhance your coverage by paying an additional premium.
Review Policy Terms and Conditions
Carefully read the terms and conditions of the accidental insurance rider. Understand the scope of coverage, conditions for claiming benefits, and any exclusions that may apply. This will ensure that you clearly understand what is covered under the policy.
Calculate Premiums
Calculate the additional premium required for the accidental insurance rider. This cost will be added to the base premium of your term insurance policy. Ensure that the total premium fits within your budget.
Fill Out the Application Form
Complete the application form accurately. Provide all necessary information, including your health, lifestyle, and occupation details. Be transparent while disclosing information to avoid any issues during the claims process.
Medical Examination (if required)
Depending on your age and the coverage amount, the insurance company may require you to undergo a medical examination. This is a standard procedure to assess your health condition.
Payment and Policy Issuance
Pay the premium for your term insurance policy, including the accidental insurance rider. Once the payment is processed, the insurer will issue the policy document. Review the document to ensure all details are accurate.
To Sum it Up
Given the unpredictability of life, staying prepared and getting an accidental death cover in term insurance is recommended to be safe rather than sorry later. Nothing can give you better peace of mind than securing your loved ones’ future even after you are no longer there. By considering your individual needs and understanding the exclusions, you can decide whether accidental death insurance is the right addition to your term life insurance policy.
Key Takeaways
- Term insurance with an accidental disability rider provides financial protection to policyholders against unexpected accidents.
- The accidental death benefit can offer lumpsum compensation in case of partial disability.
- A dependent family relying on individual income benefits significantly from accidental death rider coverage.
- Pre-existing conditions, suicide, war/unrest, criminal activity, and natural disasters may not be covered under an accidental death rider.
