Accidental Death Benefit

Definition:

The benefit that the life insurance company pays to the nominee in case the life insured dies due to an accident is known as the Accidental Death Benefit. The insurer will pay the benefit of the death happening anytime within 180 days of the occurrence of an accident.

Description:

To increase the coverage limits under the base policy, the life insured can choose a rider cover by paying a nominal extra premium. With this rider, the policy ensures to pay policy benefit + accidental death benefit sum assured to the nominee. In some policies, the accidental death benefit comes as an in-built policy benefit.

The rider provides financial assistance to the nominee if the life insured passes away, due to an accident, within the policy period. The benefit is payable in a lump sum or as monthly income as the life insured chooses.

The nominee will not receive any benefit if the life insured dies in an accident resulting from alcohol consumption, narcotics, dangerous sports, criminal or illegal activity, and others.

Example:

Rajeev purchased a term insurance policy for Rs.1 crore. He also enhanced the scope of policy coverage by buying an accidental benefit rider. The limit of cover under the accidental benefit rider was Rs.50 lakh.

Scenario 1: Death due to heart failure
If Rajeev died due to sudden heart failure, the total claim payable to the nominee under the policy will be Rs.1 crore.

Condition 2: Death due to accident
If Rajeev died due to an accident, his family/beneficiary will also be liable to receive an additional death benefit of Rs.50 lakhs under the term insurance policy. With the accidental benefit rider, the total claim payable under the policy will amount to Rs.1.50 crores.