The number of accidents in the United States, from falls to car crashes to drownings, has made the accidental death benefit rider (also known as a “double indemnity rider”) one of the most popular riders in the life insurance industry.
This rider provides additional coverage to the beneficiaries if the insured passes away due to an accident.
In this guide, we’ll answer the following seven questions:
What Are A Life Insurance Riders?
Riders allow you to customize your policy to fit your exact needs. However, adding a rider means higher monthly premiums. Therefore, you should scrutinize the costs and benefits to ensure that a specific rider is worth it for you.
Examples of these riders include:
- Waiver of premium rider = these riders waive your premium payments if you become disabled and can no longer earn an income
- Child rider = allows you to add to small amounts of life insurance for your children (~$20,000 each)
- Term conversion rider = allows you to convert a term life insurance policy into a whole life insurance policy
What Is An Accidental Death Benefit Rider?
An accidental death benefit rider (also known as a “double indemnity rider”) is an optional feature available to add to your life insurance policy. This rider provides your loved ones additional coverage (by itself, usually 1-2 time original death benefit) if you die due to an accident.
Accidental death benefit riders can be added to both whole life policies and term life policies.
Of course, you could also buy a life insurance policy that solely has accidental death benefits, called accidental death and dismemberment insurance (AD&D insurance).
What Do Accidental Death Benefit Riders Cover?
Accidental death benefit riders offer extra coverage if you have a fatal accident, wrongful death, or homicide. Types of accidents that may be covered include:
- Car or traffic accidents
- Airplane crashes
- Workplace incidents
- Fire-related injuries
- Firearm accidents
If your rider includes major injuries or trauma, you may also be covered for limb loss; loss of hearing, eyesight, or speech; or partial or permanent paralysis.
Because of the strict parameters under which the death or injury must occur to get a payout, an accidental death rider usually isn’t worth the cost.
What Does This Rider NOT Cover?
The major cause of death that accidental death benefit riders do not cover is illness.
This coverage is offered as part of a separate rider (an “accelerated death benefit” rider).
Like AD&D insurance itself, this rider also does not cover:
- Self-inflicted deaths (suicide)
- Deaths that occur while under the influence of drugs or alcohol (e.g., even accidental, illegal drug overdose)
- Deaths that occur while engaged in illegal activities
Who Needs An Accidental Death Benefit Rider?
An accidental death benefit rider may be worthwhile if you:
- Work in hazardous environments or if your job involves heavy machinery
- Travel or commute frequently, whether by car, plane, or other transportation methods
However, note that you might not qualify for this rider if you have hobbies like skydiving or mountain climbing or if you work in certain professions, like law enforcement, firefighting, or the armed forces
Which Companies Offer This Rider?
As a rule of thumb, the group of newer, online-first life insurance companies (such as Bestow, Ethos, Fabric, and Sproutt, among others) do not offer this rider while traditional life insurers do.
See below a list of companies that allow you to add an accelerated death benefit rider to your policy:
How Do Accidental Death Benefit Riders Work?
In most cases, accidental death benefit riders offer a payout that is two or three times the standard face value of the policy if your death is caused by an accident.
Let’s look at an example. Let’s say Joe has a $1 million term life insurance policy for which he pays $100 per month in premiums.
At purchase, he adds an accidental death benefit rider to his policy, meaning he has to pay an additional $15 in premiums per month, for a total of $115 per month.
Let’s say that he then passes away due to an accident (such as a car accident) before his policy expires. His family would then receive the $1 million payout from his life insurance coverage and an additional $500,000 payment from his accidental death benefit rider, for a total payout of $1.5 million.
The addition of an accidental death benefit rider will probably result in a slightly higher premium; however, this benefit increases the total benefit paid to the policy’s beneficiaries. In other words, the beneficiary receives the death benefit paid by the policy itself plus any additional accidental death benefit covered by the rider.
How Do You Prove Accidental Death?
Finally, you may have to prove that the insured’s death was caused by an accident when submitting a claim. Here are several ways that you can do so:
- A fully completed Accidental Death Benefit Claim Form
- Death Certificate
- A medical report indicating the cause of death
- A written statement outlining the date, location, and circumstances of the accident
- Police FIR copy