Many term insurance plans offer riders and the most common one you will come across is the Accidental Death Benefit Rider (ADBR or ABR). Sometimes this is combined with Disability (due to Accident) and called ADBR.
If you are evaluating a term insurance plan, we are sure you must have considered buying the Accidental Death Benefit Rider as an attachment to your term insurance plan. And there are many who have the dilemma – should I really attach it? is it worth?
Accidental Death Benefit Rider – how does it work?
We will use a simple example to explain how ADBR works.
Let’s say you plan to buy a term insurance plan with a Sum Assured (Life Insurance cover) of Rs. 1 crore. This generally covers you from all kinds of deaths (except suicide in the first year) including accidental death, death from disease or illness, natural disasters and calamities, etc. So if you were to die in a plane crash, or because of a heart attack, your nominee would get Rs. 1 crore.
But when you are young and in your 30s, you are more likely to die in an accident rather than because of an illness. Nearly 80% of death claims for those who die young (< 45 years of age) are because of accidental death. So should you not get some additional cover just in case it were to happen to you? It is definitely worth a thought.
In our view, you MUST have additional accident protection. And that is exactly what Accidental Death Benefit Rider offers. In the example above, if you were to attach the rider for Rs. 50 lakhs, and were to indeed die in an accident, your nominee would receive Rs. 1.50 crores. The ADBR (or ABR) rider gives extra protection from accidental death.
Please note, however, that even if you do attach the ADBR rider to your term insurance plan, but do not die because of an accident, your nominee would get only the Sum Assured from the base Term Insurance plan, i.e. Rs. 1 crore in the example here. So the ADBR Sum Assured of Rs. 50 lakhs is payable only if death happens in an accident, but the base Term Insurance plan Sum Assured is payable on any kind of death.
Double payout for Accidental Death Benefit Rider
Some companies offer double the payout of ADBR (i.e. Rs. 50 lakhs x 2 = Rs. 1 crore, which means a total of Rs. 2 crores including base Term Insurance Plan) in case the person who has bought an ADBR dies in a bus / train / ship / plane / any other mass transport vehicle wherein he/she had purchased a valid ticket. This is company-specific, though, and there could be some variations.
Accidental Death Benefit Rider – What it Includes
For the purpose of an ADBR payout, any accidental death caused by an external, violent, unforeseeable and visible force and which occurs independently of any other cause within x days (generally 90-180 days for most companies) of such an incident or trauma, is covered by this rider. Some other examples of accidents are…
– Death from falling off a building
– Death from hitting your head in the bathroom
– Drowning in a river when you go for a picnic, or in a swimming pool of your building
– Lightning strike or earthquake of any other similar act of God
– Electric shock at home or somewhere else
– Death from a Snake bite, Leopard bite, etc. (not mosquito bite 🙂 )
What is important is that the postmortem should clearly mention that it is an ‘Accident’.
Accidental Death Benefit Rider – What it Excludes
The Accidental Death Benefit Rider Sum Assured will not be payable if the death is caused by any of the following.
(i) Attempted suicide or self inflicted injuries while sane or insane, or whilst the Life Assured is under the influence of any narcotic substance or drug or intoxicating liquor; or medically sane or insane.
(ii) War (declared or otherwise), terrorism, invasion, act of foreign enemy, hostilities, civil war, martial law, rebellion, revolution, insurrection, military or usurper power, riot or civil commotion.
(iii) Service in the armed forces, or any police organization, of any country at war or service in any force of an international body.
(iv) Committing an assault, a criminal offense, an illegal activity or any breach of law with criminal intent.
(v) Taking or absorbing, accidentally or otherwise, any intoxicating liquor, drug, narcotic, medicine, sedative or poison, except as prescribed by a licensed doctor other than the owner of this policy or the Life Insured.
(vi) Inhaling any gas or fumes, accidentally or otherwise, except accidentally in the course of duty.
(vii) Body or mental infirmity or any disease.
(viii) Participation in aviation other than as a fare-paying passenger in an aircraft that is authorized by the relevant regulations to carry such passengers between established aerodromes.
(ix) Engaging in aerial flights (including parachuting and skydiving)
(x) Engaging in hazardous sports or pastimes e.g. taking part in (or practicing for) boxing, caving, climbing, horse racing, jet skiing, martial arts, mountaineering, off piste skiing, pot holing, power boat racing, underwater diving, yacht racing or any race, trial or timed motor sport.
The exact exclusions will depend on the company. Do refer to the ADBR Rider brochure to get details.
Accidental Death Benefit Rider – What does it Cost?
Accidental Death Benefit Rider premium generally costs just Rs. 0.50 for every Rs. 1,000 Sum Assured. It does not depend on gender, age, period of the term insurance plan, etc. So for Rs. 50 lakhs of ADBR, annual premium will be just Rs. 2,500. Some General Insurance companies could give your cheaper rates through a Personal Accident Insurance plan, but unless you are sure you will take the effort to find out about it and eventually buy it, just go ahead and get the additional protection from Accidental death with your Term Insurance plan itself. It is very cheap anyway.
ADBR included with Disability or Dismemberment can be more expensive since it gives protection against Total Disability and incapacitation due to loss or arms and/or legs.
Accidental Death Benefit Rider – When can you attach or detach?
Most companies allow you to buy it anytime during the term of the policy, as long as the base policy is in force. So even if you have already bought a term insurance plan, speak to the company and get the ADBR attached.
ADBR cannot be bought standalone.
So you are now ready to go ahead and buy your term insurance plan with Accidental Death Benefit Rider. But before you fill up the application form, don’t forget to read what precautions to take.