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The Advantages Of Choosing The Accidental Death Benefit Rider

Updated On Mar 20, 2022

Riders can be added to a term life insurance policy in addition to the regular coverage. They raise a person's premium while also expanding coverage to include more unanticipated occurrences including accidents, permanent and partial disability, major disease, and so on. One such rider is the Accidental Death Benefit Rider. It is an add-on to a person's life insurance policy that protects them and their family from death or disability due to an accident.

Accidental Death Benefit Rider

The Accidental Death Benefit Rider provides financial assistance to the life assured's family in the event of the life assured's untimely death caused by an accident during the coverage period. Accidental death benefit riders are common with term insurance contracts and are quite popular. Accidental death benefit is one of the most crucial term insurance riders to have. The rider assists in dealing with the death of the life assured as well as the financial hardship that follows the tragic event. The rider is quite useful in reducing financial hardship in the event of the life assured's accidental death, as it covers the loss of income that could affect the family for months or years.

The Accidental Death Benefit Rider, which is added to the base term insurance, pays the sum promised to the nominee. It is worth noting that if the life insured does not pass away immediately after an accident, the term insurer will pay the sum covered to the nominee 120-180 days later.  People who travel frequently by personal automobile or public transit may consider adding the accidental death benefit rider to their policy.

Importance of The Accidental Death Benefit Rider

1. Extra Layer of Protection

The Accidental Death Benefit Rider adds an extra layer of financial protection to the life assured and the life guaranteed family against life's uncertainties. The family of the life assured will receive a rider benefit amount in addition to the death benefit under the term insurance policy in the case of the life assured's untimely death due to an accident. This rider can give financial stability to the life assured's family in the event of the life assured's death. The rider benefit provided under this rider can operate as a buffer, allowing the family to meet immediate expenses, daily expenses, maintain their lifestyle, and attain their goals.

2. Multiple Payout Option

The Accidental Death Benefit Rider allows the rider benefit amount to be paid as a lump sum or in installments, which might provide a regular income for the life assured's family. The nominee has the option of selecting the payout choice that best suits their financial needs and circumstances. If the nominee chooses lump payment, the rider benefit is paid in one lump sum along with the death benefit; if the nominee chooses regular installments, the rider benefit is paid in equal installments over a set period of time along with the death benefit.

3. Tax Exemptions

Tax exemptions are available for premiums paid toward a term insurance policy and riders. Under Section 80C and 10(10D) of the Income Tax Act, 1961, the life insured can get tax exemptions for up to Rs. 1,50,000 lakh if the premium payment does not exceed 10% of the sum assured. The accidental death benefit rider provides a twofold tax benefit to the life assured, as premiums paid for the rider qualify for tax exclusions under Section 80D of the Income Tax Act of 1961.

4. No Medical Examination Required

When purchasing a term insurance policy, medical examinations are frequently necessary; however, if the life assured/policyholder chooses to acquire an accidental death benefit add-on for their term insurance policy, no such medical examination is required. This rider does not require a medical evaluation because it provides additional financial protection against unanticipated circumstances. This is another important advantage of adding an accidental death benefit rider to your policy.

5. Easy Claim Settlement

In terrible situations, such as the untimely death of the life assured as a result of an accident during the coverage period, the family would prefer a simple claim payout without having to deal with paperwork. In such circumstances, insurance providers endeavor to settle the claim as quickly as possible without bothering the family member, and only the bare minimum of proof is requested, taking in mind the family's condition. The insurance companies make it simple and quick to file a claim.

Take Away

As a result, adding riders to a person's normal term insurance policy protects their family against financial troubles resulting from unforeseen events. Individuals should always choose riders based on their own needs in order to better safeguard their loved ones and help them achieve their life goals.

Also Read: Why Is It Necessary To Include A Child Support Benefit Rider In Your Term Plan?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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