According to the Centers for Disease Control, accidents are the fourth leading cause of death in the United States, taking over 135,000 lives each year. Many riders cover other major causes including the critical illness riders. These add-on provisions increase the scope of a standard life insurance policy so the insured can customize it to fit his needs and changing lifestyle.
An accidental death rider provides added protection if the insured dies as a result of bodily injury from an accident.
The insurance company typically pays twice the face value of the policy, hence, its other moniker, double indemnity rider. These policies often cover other major injuries such as the loss of a limb or body function such as sight at a portion of the face value.
Who Should Consider an Accidental Death Rider?
Usually, this rider isn’t part of a standard life insurance policy. Despite its rank in the causes of death, disease is much more likely than accidents, causing several times the number of deaths.
However, it offers a wise option for those who work in dangerous professions such as construction or mining. If an individual travels a lot, it might also offer added security.
But there are limitations as to what the accidental death rider will cover.
If an individual participates in risky activities such as skydiving, an insurer will not honor a claim if the insured perishes as a result of it. The same caveat applies to death from military service or illegal activities.
Also, an insurance company will not pay a benefit on death from suicide.
The rider usually doesn’t require a medical examination. An insurer may offer additional coverage for a spouse or children. It’s worth noting these riders are not available in every state. Some plans include a cap on the benefit with payouts doubling for a fare-paying passenger traveling on a Common Carrier such as an airplane or train.
The distinction between passenger and pilot is crucial. While an insurance company will cover the former, it will not pay a death benefit from a death as the direct result of the latter. Therefore, it’s essential to research an insurer’s conditions on the provision.
Limitations of a Double Indemnity Rider
The rider, like most provisions, has its limitations. For example, these riders often include an age limit typically at 65. There also exists a bit of a gray area for consequences of an accident. The rider will not cover a death caused by an illness. An insurer may cover a claim caused by a bacterial infection as a direct result of an injury.
Death must occur as a direct result of the injuries incurred because of the accident usually within 90 days. However, the time frame will vary by state. An insurer will not pay a benefit if the insured was under the influence of illegal narcotics or had a blood alcohol level at or exceeded 0.08 percent. Coverage also varies depending on the insured’s participation in some activities.
For example, an insurance company will cover a death caused by homicide but will not pay a benefit if the insured was engaged in illegal activity. Likewise, many insurers will exclude coverage for deaths incurred if the insured was involved in a riot. There may also exist limitations on the time following the accident when death occurs. These limits vary by insurer and sometimes, also by state.
These riders won’t add a significant amount to the cost of the life insurance premium.
However, the insured’s occupation and dangerous hobbies play a role in the determination of the amount. Potential buyers should consult a life insurance professional if either risk category applies to their situation. Participation may place the cost of premium out of reach for some.
Often, the accidental death rider will also cover the loss of a limb or body function. Insurance companies will define specific criteria for paying out benefits in these cases. If the injury involves only one limb or function, the insurer will pay a percentage of the face value rather than double the amount upon death. Coverage of 100 percent often requires a combination of losses.
An accidental death rider provides additional coverage with double the face value of an insurance policy if the insured’s death is the result of an accident. However, limitations exist regarding the type of injury and the time after which the death occurred. Insurance companies have specific guidelines for the situations they will cover as well as the exclusions. It’s essential to know where the line exists.