Sensible investment in term life insurance can go a long way in protecting the financial future of your loved ones, even in your absence.
There is no denying that term insurance remains the most important financial planning tool, especially for individuals who have dependent family members. However, a term plan with riders adds an additional layer of protection. If cost is a concern, several low premium term insurance plans offer comprehensive protection.
In this article, we will look at term insurance riders and understand accidental death benefit rider in detail.
What are Riders in Term Insurance?
A term plan rider is an attachment, amendment, or endorsement made to a basic term life policy that provides the policyholder with supplementary coverage. Apart from offering the core death benefit, a term life rider offers multiple additional benefits and strengthens the basic term life insurance policy. While most term insurance plans offer the benefit of riders, their conditions and costs vary depending on the term plan, the premium, and the insurance provider. Some insurance riders are already included as part of the term insurance plan, while some others need to be purchased separately by paying an additional premium amount, after which they are included in your term plan.
Simply having a term plan incorporated in your financial planning is not enough. It is important to enhance and customise your policy basis your lifestyle and financial requirements. While cost is an important factor, several low premium term insurance plans can be enhanced with the help of term insurance riders to offer comprehensive financial support. The ability to customise is one of the greatest term plan benefits. Additionally, if you look for an online term plan, you can compare different rider options to find the most suitable one for yourself.
What is an Accidental Death Benefit Rider?
With an accidental death cover in term insurance, if the policyholder were to pass away owing to an accident, an additional term insurance sum assured is paid to the beneficiaries. The percentage of this additional sum is determined by the original sum assured and varies based on different insurance providers. In some scenarios, there could be a limit on the amount of the maximum sum assured on this rider, and so it is important to be aware of the terms and conditions of your accidental death benefit rider before purchasing the policy. The premium amount for an accidental death cover in term insurance remains constant throughout the tenure of the policy.
A misconception that is associated with the purchase of an accidental death benefit rider is that the sum assured is only provided if the policyholder passes away due to an accident and not otherwise. However, the beneficiary is still eligible for the basic term plan benefits. This means that if the policyholder dies owing to a reason other than an accident, the surviving beneficiary would still receive the basic sum assured. The rider simply promises an additional sum, over and above the basic sum assured in case the insured member dies due to an accident. The accidental death benefit is not limited to only road mishaps but also includes plane crashes, industrial accidents, etc.
For example, consider an online term plan of ₹40 lakhs has been purchased, and the policyholder has opted for an accidental death benefit rider that assures an additional ₹10 lakhs on accidental death. However, if the policyholder passes away due to some other reason and not an accident, ₹40 lakhs would still be paid to the beneficiary. An accidental death cover in term insurance only assures that if the policyholder passes away because of an accident, the beneficiary is paid ₹50 lakhs: 40 lakhs of the basic sum assured and 10 lakhs of the accidental death benefit rider.
While in the current uncertain scenario, an accidental death cover in term insurance can be beneficial to most, it is particularly helpful for those who work in dangerous conditions or have to travel frequently for business purposes.
Benefits of an Accidental Death Benefit Rider
Some of the benefits of buying an accidental death cover in term insurance include:
- Accidents can disrupt the life of any individual, and having an additional layer of protection can help you have a back-up plan in place.
- An accidental death benefit rider offers a bigger pay-out to your family to help them address their financial requirements.
- You can avail of term insurance tax benefits on the premium you pay for the policy under Section 80C of the Indian Income Tax Act, 1961.
- If you buy an online term plan with an accidental death benefit rider, you can lower the cost of premiums and compare different policies.
Important Exclusions in the Accidental Death Benefit Rider
There are certain exclusions to an accidental death cover in term insurance under which the additional sum assured is not paid to the surviving beneficiary. These exclusions are:
- Death caused because of acts of war
- Indulging in self-inflicted hazards
- Part-taking in illegal activities
- Involvement in adventure sports
- Being under the influence of alcohol or drugs
There are also certain age restrictions to avail of the benefits associated with this rider. The entry age for the purchase of this rider is often between 18 till 65 years of age.
Edelweiss Tokio Life Accidental Death Benefit Rider
The Accidental Death Benefit rider by Edelweiss Tokio Life Insurance is available with Edelweiss Tokio term plans. The rider ensures that the family and loved ones of the insured don’t have to scramble to make arrangements for their future in the unfortunate event that an accident befalls the insured and causes his/her death.
The primary features of this rider are:
1. The entry age is between 18 to 65 years of age.
2. The policy can be bought for a tenure ranging 5 years to 52 years, with 72 years of age being the highest maturity age.
3. The premium payment mode can be Regular, Limited or Single Pay.
By opting for this rider, you can gift financial security to your loved ones under unforeseen circumstances.
Accidental death benefit rider is a perfect addition to your term insurance if you work in hazardous conditions or are prone to accidents. Having this rider ensures an added layer of financial protection to your family in case of your unfortunate demise due to an accident.
However, before including riders in your insurance policy, it is important to be aware of the terms and conditions associated with them to avoid any unpleasant surprises. It is also essential to carefully analyse your financial needs and your lifestyle to buy a term plan.
Siddhant Dubey - Writer & Photographer
Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.