Top Reasons to Choose an Accidental Death Benefit Rider
Updated On Sep 01, 2022
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Riders are extra benefits that can be added to a standard term life insurance policy. They cost more money up front but provide more protection against calamities like accidents, permanent and partial incapacity, life-threatening diseases, and so on. The Accidental Death Benefit Rider is one of these riders.
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. It's a double protection rider, so if someone dies in an accident, both the life insurance policy and the rider's sum will pay out.
How Significant is the Accidental Death Benefit Rider?
The Accidental Death Benefit Rider covers a clear and permanent loss: the loss of a life. Because of this, their family has to deal with both emotional and financial problems. The cost of emergency medical bills is already too high, and if the illness turns out to be fatal, the family will lose both a loved one and a source of income. Because of this, an accidental death rider is very important. With the addition of an accidental death benefit rider, the double risk of medical bills and a permanent loss of income from the breadwinner's death is made less painful.
How Accidental Death Benefit Rider Works?
Most accidental death benefit riders provide a lump sum payment in addition to a life insurance policy's death benefit. This rider was previously called a twofold indemnity rider since it may double the money their family receives. If the insurance company certifies the insured's death meets the rider's provisions, the family will get the reimbursement.
An accidental death benefit rider will increase their premiums or payments. Adding protection now may prevent significant unplanned expenditures later.
Top Reasons to Choose an Accidental Death Benefit Rider
1. A Layer of Protection
The accidental death benefit rider gives the insured person and their family an extra layer of financial protection against the unexpected things that can happen in life. The rider benefit amount will be given to the person's family in addition to the death benefit from the term insurance policy if the person dies in an accident and the cause of death is unknown.
If the life assurer dies, this rider can help the life assured's family take care of their financial needs. The rider benefit that is paid out under this rider can act as a shield, giving the family money to pay for immediate and daily costs, keep up their lifestyle, and achieve their goals.
2. Payouts
The accidental death benefit rider lets the beneficiary's amount be paid out as a lump sum or as regular payments. This can give the insured person's family a steady income. The nominee can choose the payment option that best fits their financial situation and needs. 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 payments, the rider benefit is paid in equal payments over a certain amount of time along with the death benefit.
3. Tax Rebates
You can get a tax rebate on the premiums you pay for term insurance and riders. Under Sections 80C and 10(10D) of the Income Tax Act of 1961, an insured person can get a tax refund of up to Rs. 1.5 crore if the premium payment does not exceed 10% of the amount promised. The accidental death benefit rider gives the life guarantee two tax benefits. First, Section 80D of the Income Tax Act of 1961 says that premiums paid for the rider are not taxed.
Conclusion
So, adding riders to a normal term insurance policy protects a person's family from financial problems caused by things that are hard to predict. People should always choose riders based on their specific needs so they can give their loved ones more security and help them reach their goals in life.
Also read: Maturity Benefits In Life Insurance
