An accidental death rider ensures added financial protection if the insured dies as a result of bodily injury from an accident.
In the case of accidental death, the insurance company typically pays twice the face value of the policy, hence its other moniker: the double indemnity rider.
These policies also typically cover other major injuries, such as the loss of a limb or vision, at a portion of the face value.
We’ve broken down what you need to know if you’re considering the addition of an accidental death rider to your life insurance policy.
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Who Should Consider an Accidental Death Rider?
According to research conducted by the Centers for Disease Control and Prevention, accidents are one of the top five leading causes of death in the United States, taking over 135,000 lives each year.
Owning a life insurance policy with an accidental death rider could mean the difference between leaving your loved ones with piles of debt or making sure they’re covered in the event of your accidental death.
An insurance rider is an add-on provision that increases the scope of a standard, underwritten life insurance policy so the insured can customize it to fit his or her needs and changing lifestyle.
If you fall into one of the categories mentioned below, then the accidental death rider may perfectly supplement your standard insurance policy’s offerings:
- Workers in dangerous professions: these types of jobs would include construction, mining, logging, or hyperbaric welding, among others where work-related accidents or fatalities happen more often than not.
- Frequent travelers: For individuals who travel often, whether for personal or professional reasons, this particular rider might offer added financial security. Unexpected weather or mechanical issues can sometimes make traveling risky for passengers.
- High-risk participants: An insurer will not honor a claim if the insured perishes as a direct result of participating in high-risk activities, such as skydiving or riding dirt bikes. The same caveat applies to death from serving in the military or participating in any illegal activities.
To be clear, the accidental death rider isn’t usually part of a standard, fully underwritten life insurance policy available through insurance providers.
Policyholders must choose to include it as an additional provision to their base life insurance plan.
Other situations that would qualify as “accidental” causes of death to an insurance company could include slipping and falling, being a victim of a crime, or dying in a natural disaster.
There are also riders that cover other major causes of death, including critical illness riders.
Diseases (such as heart disease or diabetes), though they cause far more deaths than accidents, fall in the ranks of “natural” death and would not be covered under either accidental or critical illness riders.
So, keep in mind that if an individual solely purchases an accidental death policy, the insurance company will not provide coverage for any causes of death deemed “natural.”
What Should You Know About the Accidental Death Benefit Rider?
The double indemnity rider usually doesn’t require one to undergo a medical examination or to answer any health-related questions.
For individuals who don’t qualify for traditional term or whole life policies, this option may be their best bet.
This also means full-on coverage should commence once payment has been processed, unlike more traditional life insurance policies.
However, there’s a slight chance policyholders may encounter higher insurance premiums from adding this specific provision.
Insurance carriers may also offer additional coverage for a policyholder’s spouse or children, if desired.
It’s worth noting the accidental death rider is not available in every state. Before digging too deep into this rider’s specifics, contact your insurance provider to see if this provision is available in your state.
Some common 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 a train.
The distinction between passenger and pilot is crucial when it comes to this provision. 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 fixed conditions on the provision beforehand.
Since there are limitations as to what the accidental death rider will cover, policyholders need to consider this offering from all angles before making a final (and often highly impactful) decision.
What is a Dismemberment Benefit?
Often, the accidental death rider will also cover the loss of a limb or body function after an accidental injury.
Insurance companies will define specific criteria for paying out benefits in these cases.
If the injury involves only one limb or body function, the insurer will pay a percentage of the policy’s face value, rather than double the amount upon death.
Coverage of 100 percent often requires a combination of losses, which will be clearly defined in your policy.
What are the Limitations of a Double Indemnity Rider?
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 that has lapsed before the death occurred.
Insurance companies have specific guidelines for the types of situations they will cover and the exclusions they must apply.
For any policyholder interested in the accidental death rider, it’s essential to know where the line exists.
Death must occur not only as a direct result of the injuries incurred from an accident, but also usually within 90 days.
The time frame will vary from state to state. And, 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 exceeding 0.08 percent at the time of the accident.
Other examples of limitations include:
- Age: these riders often include an age limit; typically 65 years of age.
- Illness: the rider will not cover a death caused by an illness, since this would be considered a more “natural” death.
- Suicide: an insurance company will not pay a benefit on death caused by suicide.
But, an insurer may cover a claim caused by a bacterial infection as a direct result of an injury.
Coverage also varies depending on the insured’s participation in some predetermined activities.
For example, an insurance company will cover a death caused by homicide, but will not pay a benefit if the insured was killed while engaging in an illegal activity.
Likewise, many insurers will exclude coverage for deaths incurred if the insured was involved in a riot.
Is an Accidental Death Rider Right for You?
Any individuals seeking an extra hedge of protection for themselves and their families should consider supplementing their base life insurance policy with a double indemnity provision.
These riders typically won’t add a significant amount to the cost of the life insurance premium.
However, the insured’s occupation, along with any dangerous hobbies, play a significant role in the determination of the amount.
Potential buyers should consult a life insurance professional if either risk category applies to their particular situation.
Participation in one or more category may place the cost of premiums out of reach for some individuals.
Nonetheless, for any insurance policy or provision under consideration, make sure to grasp not only what benefits you’ll reap, but also the limitations you’ll encounter from investing in the product.