Accidental Death Benefit
Indemnity is defined as the amount of compensation paid by one party for damages suffered by another party. In the case of life insurance, it refers to the policy death benefit which is paid to beneficiaries when the insured person dies. Double indemnity, also known as the accidental death benefit rider, refers to the doubling of the policy death benefit in the case of sudden, accidental death. The accidental death benefit includes an optional clause in a life insurance policy and generally requires the payment of additional premiums to get the benefits of the rider.
Accidental Death Benefit Rider
The additional coverage for an accidental death benefit is not standard and varies between companies. Group life insurance policies purchased through an employer may only provide an accidental death benefit for work-related accidents. Privately purchased policies could include death arising from any accidental cause. All exclusions contained in the life insurance policy also apply to the accidental death benefit, and the rider only covers death arising from accidents.
Accidental Death and Dismemberment
Although accidental death and dismemberment insurance is sold separately, AD&D insurance may also be included as a rider on a life insurance policy. As a rule, it is less expensive to purchase this AD&D insurance as an addendum to an existing policy than purchase an individual accidental death and dismemberment insurance policy.
AD&D policies cover accidental death or the loss of a limb(s) caused by an accident, and will result in the pay out of some of your insurance. In other cases where more than one extremity or sight is lost, the total value of the death benefit will be paid out.
Once the policy limit has been reached by payment of a death benefit or a dismemberment claim, the policy is no longer in effect. If the insured policyholder dies from the same accident, the full life insurance death benefit will be paid out, and no additional funds or payout will come from the dismemberment portion of the insurance policy.
What Is Accidental Death?
Death from accidental causes does not have to occur at the time of the accident. Most policies will pay the additional death benefit if the death occurs within one year of the accident and is directly attributable to injuries received in the covered accident. The accidental death benefit may also exclude accidents arising from hazardous hobbies or activities, like skydiving or bungee jumping, which the insured practices regularly.
However, some life insurance companies insist on excluding coverage for accidental death when the policyholder’s job is considered hazardous. This simply means that your family will not receive an additional payout from your accidental death benefit rider, but may receive compensation from your employer and life insurance. Again, it is important to read the fine print and all the exclusions before buying life insurance.
Adding An Accidental Death Benefit Rider
Accidents are the most common cause of death for people under the age of 55. For those under the age of 18 who have child life insurance, or those with no financial obligations, double indemnity riders are not necessary. Applicants or consumers who have purchased enough life insurance to cover current and future financial obligations usually do not need the additional benefits.
Policyholders who do not have enough life insurance to protect their families’ financial futures, living expenses, and liabilities should consider adding an accidental death benefit to their term life or whole life insurance policy.
Life Insurance Quotes
Although many people believe the double indemnity clause is standard on life insurance policies, it is not. An accidental death benefit can be a good investment for young Americans with families to support since it is usually less expensive than increasing the life insurance policy limit. It is best to carry enough coverage on the primary policy, but the double indemnity rider may help close the gap and provide additional financial security for your family, wife and children. Enter your 5-digit zip code with TheLifeInsuranceQuote.com, and find life insurance quotes online to compare policies, insurance companies, and prices to buy the best, cheap life insurance.
