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What is Accidental Death Benefit and what are its types?
Accidental Death Benefits are riders added to standard life insurance policies. It pays an additional sum to the beneficiaries in case of accidental death of the insured. There are variations in definitions of accidental death and hence one must be clear about what constitutes an accidental death before opting for these policies.
Accidental death benefits are additional policies that pay the beneficiary lump-sum or differential payments that may extend up to a year depending on the insurer. These benefits cover the employees when a group insurance policy has been opted by the employer.
Accidental death benefits are more relevant to workers who have exposure to probable accidents more than general individuals. For example, drivers need accidental death benefits more than teachers or scientists to get the beneficiary to have the assurance of getting more amount of money in case of his death.
Accidental benefits are important because they save the family or the beneficiary from a sudden financial shock after the death of the insured. It is aimed to provide peace of mind to the insured's family when they need it the most. However, accidental benefits often have limitations and are paid only if the death occurs due to an accident.
Additional premiums may be necessary for getting the death benefits covered completely. The amount of death benefit is determined by these premiums. More premiums mean that the insured's family or the beneficiary will get more returns on the death of the insured.
Special Considerations
The meaning of accidents usually varies from one insurance company to the other. However, most companies consider choking, drowning, car crashes, slippery and machinery deaths as accidents. Accidental death benefits are payable only when death occurs within a specified period.
Some accidental policies acting as a rider pays for the dismemberment of organs as well. For example, Accidental Death and Dismemberment (AD&D) policies pay for loss of limbs, eyesight, and hearing as well.
Accidental benefits do not pay for events that are considered risky. For example, car racing and bungee jumping are not covered by accidental death benefits policies. Additionally, deaths due to hazardous environments and wartime acts are also not covered by accidental death benefits.
Types of Accidental Benefit Policies
Group Life Supplements − In these policies, the benefits are offered for being part of a group life insurance policy. The benefits are payable according to the group's beneficiary policies.
Voluntary Policies − These benefits are offered to employees by the employer. The responsibility to pay the insurance is the insureds though. Usually, the premiums are collected from monthly wages and benefits are payable if the employee leaves the job too.
Travel Insurance − This policy is meant for business travelers and is offered by employers covering death benefits completely.
Dependents − Some people also include dependent's policies where the final beneficiaries are dependents.
Points to Note
Accidental death benefits offer financial help to the insured's family or the beneficiary.
Some accidental benefits pay for dismemberment as well.
There are various types of death insurance benefits depending on the types of death and the target beneficiary.
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