Accidents can be small, or accidents can be life-threatening. Financially, you’ve got to plan for them, but most people don’t consider that on their life insurance policy.
But there’s a rider you can add to take care of this risk.
An accidental death rider ensures added financial 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: the double indemnity rider.
These policies often cover other major injuries, such as the loss of a limb or vision loss, at a portion of the face value.
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.
Many riders cover other major causes, including the critical illness riders.
These add-on provisions increase the scope of a standard, underwritten life insurance policy so the insured can customize it to fit his or her needs and changing lifestyle.
To be clear, this rider isn’t usually part of a standard, fully underwritten life insurance policy available through insurance providers.
Policyholders must choose to include the accidental death rider as an additional provision to their base life insurance plan.
Despite its rank in the causes of “natural” death, diseases, such as heart disease or diabetes, are much more likely than accidents and cause several times the number of deaths.
Nonetheless, if an individual solely purchases an accidental death policy, the insurance company will not provide coverage for any causes of death deemed “natural.”
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 from a natural disaster.
An accidental death rider is an ideal provision to consider for the following types of individuals:
- Workers in Dangerous Professions: These types of jobs would include construction, mining, logging, or hyperbaric welding, among others. These types of professions feature work-related accidents or fatalities more often than not.
- Frequent Travelers: For individuals traveling a lot, whether for personal or professional reasons, this particular rider might also offer added financial security. Unexpected weather or electrical 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.
If you fit in one of the categories mentioned above, then the accidental death rider may perfectly supplement your standard insurance policy’s offerings.
Accidental Death Rider: The Nuts and Bolts
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 offer additional coverage for a policyholder’s spouse or children, if desired.
It’s worth noting that 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 long-lasting) decision.
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 body 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 both the situations they will cover and the exclusions they must apply.
For any policyholder interested in the addidental death rider, it’s essential to know where the line exists.
Limitations of a Double Indemnity Rider
The accidental death rider, like most insurance-related provisions, has its fair share of limitations. For example, these riders often include an age limit, typically 65 years of age.
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, since this would be considered a more “natural” death. Also, an insurance company will not pay a benefit on death caused by suicide.
An insurer may cover a claim caused by a bacterial infection as a direct result of an injury.
Death must occur not only as a direct result of the injuries incurred from an accident, but also usually within 90 days.
But, the time frame will vary from state to 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 exceeding 0.08 percent.
Coverage also varies depending on the insured’s participation in some pre-determined activities.
For example, an insurance company will cover a death caused by homicide, but will not pay a benefit if the insured 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 depending on the insurer and sometimes also vary from state to state.
These riders 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 may place the cost of premium out of reach for some individuals.
The Bottom Line
Whenever an accidental death occurs, families must learn to unexpectedly cope with the loss of a loved one.
Thankfully, life insurance is designed to protect these vulnerable individuals and their families from situations that can’t always be controlled, such as an accidental death.
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.
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 said product.