Accidental Death Benefit In Term Insurance: A Complete Guide

In this article, you will know about features of accidental benefits under various Term insurance plans and features of term insurance plans in general.

What Is Term Insurance?

Term insurance is the purest form of insurance that you can buy for yourself and secure the future of your family after your untimely demise. It is a life insurance policy that provides financial coverage to the nominee in the policy if the life insured dies untimely.

Among all the life insurance policies, Term insurance offers the highest coverage with minimal premiums. Some companies also cover the partial or permanent disability of the insured. Term insurance is the only plan that comes under pure risk.

Note: Now that you know that what is term insurance plan you can easily buy a term plan for your loved ones.

Accidental Death Benefit in Term Insurance

An accidental death benefit is an add-on to your term plan that increases the payout for your nominee if you suffer an untimely death due to an accident. The additional sum assured is calculated based on the original sum assured and varies from one insurance company to another.

The premium for this rider remains fixed for the entire policy term.

It is a misconception that a policyholder can avail accidental death benefit only if an accident is the cause of death. It is not true. The accidental death benefit is paid in addition to the standard benefit payable under a term insurance plan if the life assured suffers an untimely death due to natural causes.

For example, if your base cover is ₹1 crore and you add ₹50 lakh under an accidental death insurance rider, your family receives ₹1.5 crore in case of accidental death. If death happens due to illness, the base amount is still paid. An accidental death insurance policy simply adds extra protection without reducing your original cover.

Are Accidents Covered in Term Insurance?

Yes, a regular term plan already covers death from accidents. The full amount is paid no matter what the reason is. An accidental death policy, on the other hand, pays an extra amount if the death was due to an accident. For a small additional fee, this accidental life insurance feature gives your family more money when they need it most. You can use the term insurance calculator to find out how much you would have to pay for the coverage you need for your profile.

Who Should Add the Accidental Death Benefit in Term Insurance?

This important term insurance rider is helpful for primary earners, frequent travellers, and those working in high-risk jobs. It is also useful for anyone who wants stronger protection without increasing the base cover significantly. Since accidents are unpredictable, adding accidental death insurance is a practical step to strengthen your overall financial safety net.

How the Accidental Death Benefit in Term Insurance Works?

Look at an example for better understanding:
INR 60 lakhs term insurance policy is taken and the accidental death benefit rider assures an additional INR 20 lakhs on accidental death. INR 60 lakhs will still be paid in case of death not caused by accident, and INR 80 lakhs (60+20) will be paid in case of accidental death.

What are the Term Insurance Rider Benefits?

Term Insurance Riders help strengthen the policy by providing multiple additional benefits. There are mainly six types of riders under a term insurance plan

• Accidental Death Benefit Rider

• Terminal Illness Benefit Rider

• Accidental Total Permanent Disability Rider

• Critical Illness Benefit Rider

• Waiver of Premium Rider

• Hospicare Benefit Rider

Note: Know all term insurance benefits before buying a term plan for your loved ones.

Rider Benefits

Riders strengthen the term insurance policy by providing multiple additional benefits. There are mainly six types of riders under a general term insurance plan

• Accidental Death Benefit Rider

• Accelerated Death Benefit Rider

• Accidental Disability Benefit Rider

• Critical Illness Benefit Rider

• Waiver of Premium Rider

• Income Benefit Rider

Let us know more about accidental death benefit rider

Benefits Of Term Insurance

Here are some key features of term insurance that will help you get a better understanding of the plan and help you choose it wisely.

1. Easy To Understand Than Other Policy Plans

   Buying a term plan is comparatively easy than any other plan. The framework of the term plan is comparatively very easy. There are no deep clauses or terms and conditions when term insurance is involved. It is an easy, hassle-free, and simple plan as there are no investments or saving clauses involved. One needs to pay the premiums on time and the insurance provides cover and benefits during that duration.

2. Easy To Cancel

   As easy as to start, it can be canceled as well. As there are no investment or premium benefits involved in the plan, it is easy to stop anytime you want.

3. Lower Premium

   A term plan is much cheaper than your one-time fancy restaurant bill. Believe it or not but it is true. As there are no high investment components involved, term insurance is available at very affordable premium rates as per your annual income and age.

   Note: You can easily calculate the term plan premium by using the term insurance calculator online tool.

4. Higher Sum Assured

   Imagine putting 5% effort into your work and getting promoted by your boss. Sounds fascinating right? Term insurance is a kind of plan where at a very minimal premium you can get high coverages. If you choose the correct insurance plan, your loved one will surely benefit from it when you are not there.

5. Financial Security

   It is big-time financial security for your loved ones once you are not around to look after them anymore. It provides financial protection to the family and takes care of the liabilities in your absence. Don’t hesitate to buy it for your family’s better future when you are not around.

6. Customizable

   The policy period, coverage, payment options (whether monthly, annually, lump-sum) depends on you. You can customize it as per your suitability.

7. Critical Illness Coverage

   We know that the treatment of expenses incurred during a critical illness can be exhausting physically, mentally, and most important financially. As the critical illness in life is not predictable, a term insurance plan works wonders during this testing time. It is highly recommended to avail of critical illness coverage benefit in your term plan, as you never know what lies in the future. 

8. Ultimate Tax Benefits

   All the premiums you pay are tax-exempted under Section 80C. With critical illness cover, you can also avail additional tax benefits*.

   * Tax benefit is subject to changes in tax laws

Wrapping it Up!

Additional riders offer great coverage to the policyholder and are definitely beneficial in the long run. Term insurance rider benefits help both you and your family to plan a better life. Indeed, accidents cannot be planned but one can very well prepare for them beforehand.

Note: Check out the best term insurance plan in India and choose one that suits your requirements.

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