Extra Payout on Accidental Death: What to Know

The only certain fact about life is that it is uncertain. Mishaps can happen anytime, to anyone. So, it is advisable to invest in risk protection plans that cover you and your dependents against various uncertainties in life. One of the straightforward ways of doing that is by buying a term insurance policy. It provides a lump sum payout if the policyholder dies during the policy tenure. It is highly affordable (low premiums). However, what you might not know is that you can increase the payout amount by buying an accidental death benefit rider.

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What is this rider and how it can offer added protection to your family? Find all the information in this article. 

What to Know About Extra Payout on Accidental Death

The accidental death rider is crucial because it addresses a total irreparable loss - the loss of the family's breadwinner. The policyholder's dependents have to bear the emotional pain along with financial strain in case of his/her death due to an accident. Medical emergency expenses are already a huge expense, but if they turn fatal, then the entire family will have to face losing the life of its loved one as well as the future income. The crushing impact of this double jeopardy of medical costs and the permanent loss of income due to the loss of a breadwinner is lessened by the use of the rider that covers accidental death.

How Accidental Death Benefit Can Help You Get Extra Payout?

The accidental death benefit rider comes with several benefits, some of which are mentioned below:

  • You can have peace of mind that you are protected against accidents of all sorts.
  • Depending on your insurer, you can get a higher accidental death payout in addition to the normal sum assured.
  • The premiums for this rider are constant throughout the policy tenure.

We are sure you will understand this better with an example. So let's take one:

Sunil bought a term insurance plan with Rs.50 lakhs as a sum assured. He also purchased an accidental death benefit policy add-on. This rider will offer an extra Rs.10 lakhs if Sunil passes away due to an accident. However, Sunil would have to pay an extra amount to avail of this benefit. 

So let us assume that the yearly premium payment excluding the rider is Rs.10 thousand. Now let us assume Sunil needs to pay Rs.800 extra every year to avail of the accidental death benefit rider. In that case, he needs to pay Rs.(10,000 + 800) = Rs.10,800 per annum. 

Paying the premium amount of Rs.10,800 per annum will provide a cover of Rs. (50 lakhs + 10 lakhs) = 60 lakhs if he passes away due to an accident.

So, you see - Sunil simply increased 10 lakhs in protection simply by paying Rs.800 yearly. 

Exclusions to Accidental Death Benefit Rider

This rider comes with many exclusions. That implies that deaths due to certain circumstances, such as:

  • Death through alcohol/drug overdose
  • Self-inflicted injury, suicide
  • During employment in the armed forces
  • Riots
  • Adventure sports like bungee jumping
  • Civil commotion
  • Involvement in an aviation or aeronautical operations-related accident
  • War
  • River rafting
  • Scuba diving, etc.

Additionally, there are limitations on the age at which you can avail of the benefits provided by the rider. For example, the rider cannot apply to the policyholder after they reach 75 years. Also, the insured cannot avail the rider once he/she reaches 65 years of age.

Are You Eligible Extra Payout on Accidental Death?

This rider is usually advisable for people whose work either involves frequent travel or those who work in dangerous conditions.

However, accidents are unavoidable situations that can knock on anyone's doors. Thus, it is wise for everyone to select the death benefit rider in the event of an accident when purchasing a term plan. This is because even those who do not work in hazardous conditions or travel frequently could encounter a devastating accident.

Summing It Up

Accidents can happen anytime and are almost impossible to foresee. However, what is possible is to equip yourself with policies designed to look after your loved ones if god forbid something happens to you in the future. Keeping that in mind, we have tried our best to explain the concept of extra payout on accidental death in this article. Make sure you understand it properly and make an informed decision.

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