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Do You Need an Accidental Death Benefit Rider with Term Plan?

26-April-2022 |

A term plan is an insurance policy that offers financial security to the family in the unfortunate event of the policyholder’s death. Although it is a basic product, it is essential. It is a cover you can invest in for a specific term.

When purchasing a term insurance plan, you must know that you can enhance it to avail multiple benefits besides its core offering. You can strengthen a term plan by paying a little more to buy term insurance riders#.

What are Term Life Insurance Riders#?

An amendment, endorsement, or attachment made to a standard term life policy is called a term insurance rider. These amendments give the policyholder supplementary coverage. The riders# available for term insurance include:

  • Critical illness

  • Accidental death benefit rider

  • Partial and permanent disability

  • Accelerated sum assured

  • Waiver of premium

Understanding the Accidental Death Benefit Rider

Accidents are a common cause of death. A term policy with the accidental death benefit rider offers an additional sum assured to the family of the insured in case he or she dies due to an accident. The percentage of this additional sum is calculated based on the original sum assured and differs for different insurance providers.

When you add death benefit insurance to your term policy, you must read its terms and conditions. Some policies impose a limit on the amount of the maximum sum assured of this rider. The premium you pay for the rider benefit in term insurance is the same throughout the policy period.

Many policyholders worry that after purchasing an accidental death rider#, the sum assured is received only if the policyholder dies due to an accident. However, this is not true. The beneficiary or the family of the deceased is eligible for the basic term plan benefits even if the cause of death is not an accident.

The rider guarantees1 an additional sum, beyond the basic sum assured, if the cause of death of the insured member is an accident. The benefit is not limited to mishaps on the road. It also includes industrial accidents, choking, plane crashes, and other such scenarios that are an accident.

So, if your term policy has a sum assured of ₹50 lakhs, and you purchase an additional rider of ₹15 lakhs, the beneficiary will receive ₹65 lakhs if the death is due to an accident. And if the death is not because of an accident, the beneficiary will receive ₹50 lakhs.

Why Should You choose an Accidental Death Benefit Rider?

The death benefit rider is of extreme importance for an individual who is employed in an accident-prone workplace or regularly embarks on adventurous trips or engages in life-threatening sports/hobbies.

The rider covers an absolute, irreversible loss - death of the life assured. The family of such an individual has to cope with emotional grief as well as significant financial stress, especially if the policyholder is the only breadwinner. Emergency medical expenses are challenging to meet. Moreover, if the outcome of the event is fatal, the family has to face the loss of a family member and future income.

Accidental death benefit rider helps the family ease through the process and tackle the blow of double jeopardy of medical bills and permanent loss of income.

What is Classified as an Accidental Death?

According to insurance companies, accidental death is the loss of life strictly due to an accident. These include deaths from drowning, choking, slips, car crashes, machinery, and any such situations that are not in a person’s control and recognized accidental. In the event of a fatal accident, the policy applies only if the death occurs within a specified period.

What are the Advantages of a Term Insurance Plan with Death Benefit?

Accidents are unfortunate events that anyone can encounter at any time. The rider is typically suggested to individuals who are the primary provider of a family and indulge in professions that require them to travel frequently or work in hazardous conditions. However, others can often experience horrific accidents. Adding the rider# to your term policy is a wise decision due to the following benefits:

  • The rider pays your family a lump-sum amount over and above the sum assured as per term policy in case of accidental death.

  • The benefits are doubled if you suffer from accidental deaths or dismemberments under specific circumstances entailed by the insurance provider.

  • The rider pays a percentage of the sum assured to the family in case of severe dismemberment like severe burns, loss of bodily functions, or limbs due to an accident.

  • As per Section 80C of the Income Tax Act, the rider insurance premium is eligible for tax* benefits.

What Kind of Deaths Does the Death Benefit Insurance Exclude?

If you purchase an accidental death rider to add to your term plan, there are certain exclusions. The benefits under the rider do not apply to deaths caused by acts of war, hazardous hobbies, illegal activities, self-inflicted hazards, and more.

Additionally, there are age limits attached to the rider. If you do not fall under the accepted age limits, you cannot avail of the benefits. For example, the rider insurance may not apply to the investor if he or she is 75 years of age. The minimum age for entry into a rider is 18 years, while the maximum age for entry is 65 years.

If you buy a Tata AIA life insurance plan and add the accidental death benefit rider to it, you can enjoy a minimum sum assured of ₹50,000. The maximum sum assured is determined based on the sum assured chosen for the base plan.

Final Takeaway - Should You Buy a Death Benefit Rider?

Accidental death benefit rider# is an ideal addition to your term insurance if your work environment is dangerous and prone to accidents. In the event of your unfortunate death due to an accident, the rider adds an additional layer of financial protection for your family, over and above the base term insurance plan.

While adding life insurance riders to your policy is a good idea, you must go through the terms and conditions associated with them. This enables you to avoid any unpleasant surprises. Before buying a term plan, make sure you take into account your financial needs and your lifestyle.

You can use our online term insurance calculator to determine the sum assured, choice of riders, rider sum assured, premium payment term and premium payment mode of your choice. Buy a term plan that meets your budget and your family’s future financial needs.

L&C/Advt/2022/Apr/0850

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

Looking to get a new plan? 

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+91

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA), Tata AIA Life Insurance is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer
  • Insurance cover is available under the product.

  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • * Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility for tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.

  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch

Need more information?

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

Looking to get a new plan? 

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.