Term Insurance

Should You Opt for Accidental Death Benefit (ADB) Rider With Term Plan?

Nov 16, 2021

Should You Opt for Accidental Death Benefit (ADB) Rider With Term Plan?

It was a usual busy Monday morning and Rahul was running late, like always. He skipped the breakfast, took the keys and left in a rush. While he was starting his bike, his 2-year old daughter tried to say bye. He drove away with a smile, accelerating his trustworthy bike and planning to take the short cut. 

He just took a turn into an alley and Bam! His bike crashed directly into a loader depositing bricks on the ground. Rahul fell right onto the bricks while more were piled on his body. 

Rahul died before reaching the hospital!

Within a few minutes, a happy family of three was rendered hopeless, devoid of its earning hand, family head and a clueless spouse with limited or near zero means to live-on!

Accidents happen daily and can happen with anyone out there, including us!

Apart from the routine things such as travelling and commuting, there are many people that are employed in professions where injury and accidental death are quite common. 

While we cannot control the accidents, we can surely minimize its effects on the financial well-being of our dependents and us. An accidental death benefit rider is one such smart step that you can take to make your term insurance plans better suited to life emergencies, such as accidental death. 

Let us find out how!

Accidental Death Benefit Rider (ADB) - How it makes your term plan even better?

While a term plan is a perfect financial cover for the various needs of your dependents after you, various insurance riders, make this cover more robust. The riders are paid features that you can attach with your term plan to expand its scope and have an added layer of financial protection. 

An ADB rider fetches additional rider benefits in case of accidental death of the person insured. This benefit is in addition to the sum assured in the term plan. In many cases, an accident doesn’t cause an on-spot death. The person succumbs to the injuries weeks or months later. Different companies have different rules for offering cover in such situations, such as giving benefits if a person dies after 100 days of his accident. 

An accidental death benefit rider’s claim is given instantly and comes as a relief to the family affected. Teh family can rely on its monetary support until the formalities of term plan claim and other such insurance policies are done. 

Let us explore the ADB rider in depth.

What is an accidental death benefit rider and what does it cover?

An accidental death benefit or ADB rider offers you benefit (sum assured) in addition to the normal death benefit promised via a term plan.

Suppose your term plan promises you INR 25 lakh in an event of death, and you have attached an ADB of INR 15 lakh with it. Now, any accidental death will fetch you INR 40 lakh in total, which is far more than INR 25 lakh.

Hence, an ADB rider boosts the financial security foothold even better!

Some of the common accidental death causes ADB riders cover are:

  • Falling off a building
  • Slipping in the bathroom resulting in fatal head injuries
  • Drowning in a river or swimming pool 
  • Earthquake, Lightning strike or any other similar act of God
  • Electric shock 
  • Snakebite, Leopard attack or any other wild animal attack etc.

Key Pointers about Accidental Death Benefit Rider:

  • ADB rider is paid to the nominee of an accidental death insurance plan only in the case of an accidental death.
  • It benefits the dependents of the deceased who died in an accident. 
  • It has a low premium (60% to 70% of term plan) because it covers untimely death (accidents). The premium value is fixed for the entire duration.
  • ADB riders are optional and are not pre-included in standard term plans. Its benefits can be availed even if the person insured succumbs to the injuries months after the accident (duration might vary across the companies and policies).
  • If you work in hazardous or accident prone jobs or places, you must opt for ADB riders to secure the financial future of your families in a better way.
  • No medical exam is required to attach the ADB rider to your term plan.
  • Typically, the ADB rider ends when the person reaches an age of 70 years.

Who must opt for an ADB rider with a term plan?

  • People employed in hazardous sites and dangerous jobs such as mills, factories, mines, construction sites, forest guards and safari managers etc.
  • People employed in areas exposing them to nature’s extremes such as dams, power plants, electricity units etc
  • People working in public rescue departments and critical operations such as bomb disposal squads etc.

How is the premium calculation done for an ADB rider and Term plan bundle and what factors are counted for premium calculation?

The premium for a term plan and ADB rider bundle is more than a regular term plan. The amount varies as per the sum assured fetched by the ADB rider and many other factors that are explained in the following section.

  • Gender - Females have lesser premium values for term plans and lower premium values for ADB riders
  • Age - After completing 65 years of age you are not allowed to take an ADB rider and around 70 years’ of age, the ADB riders automatically expire
  • Percentage of Sum Assured - Many insurance companies charge a small percentage of the rider sum assured towards premium payment.
  • Benefits attached - Many people look for additional benefits such as covering specific accidents or group cover benefits. In such cases, the premium varies from company to company
  • Driving Record - If you are planning to get a cover against road accidents, your driving record affects the premium amount.
  • Health and Lifestyle - Smoking, drinking and addictions are not covered under ADB riders. So, your lifestyle habits and current health certainly affect the premium amount
  • Family Medical History - Families where illnesses and accidents are the rampant causes of death have to pay higher premiums.

What benefits does ADB offer as a bundle with a term plan?

  • An ADB rider offers extra cover in situations where death is caused by an accident.
  • You can get additional financial security along with a normal policy payout.

So, invest in an ADB rider and make your term plans more secure and better equipped for the future.

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