Accidental Death Benefit
Accidental death benefit otherwise known as double indemnity is a provision in a life insurance policy that ensures additional payment, typically equal to or twice the insurance’s face value, to the survivors in the event that the policyholder dies due to a sudden accident. It is often called double indemnity clause because it frequently compensates twice the face amount of the insurance. The policyholder however needs to pay an extra fee, which is usually a small amount, in order to have the option included in the insurance policy. There are insurance companies which offer “Triple indemnity”. This option also requires additional fee and pays the policyholder’s survivors additional payment which is thrice the face value of the insurance.
The clause legally binds the insurance provider to pay cash to the beneficiaries in addition to other benefits provided that the cause of death is due to an accident. An accident can be construed in different ways, at times it can just be limited to work-related accidents while there are also many insurance providers which covers various sorts of accidents that result to death. Among the accidents which insurance companies normally cover are homicide, falls, drowning, traffic and heavy equipment accidents. Insurance providers don’t generally cover deaths due to natural causes, illness or suicide but some may cover accidental deaths due to terrorism or war. If for example a policyholder dies from a plane crash or a road accident, the survivors are entitled to the additional payment promised in the life insurance policy. There are insurers who allow benefits to be extended to one year from the occurrence of the initial accident just as long as the reason of death is the accident. Accidental death benefits is usually terminated when the policyholder reaches the age of 70.
However there are certain restrictions which insurance companies usually impose in offering the accidental death benefit option. That’s why it is very important to read and understand the conditions and exclusions in an insurance policy. If at the time of the application the policyholder engages in a job that exposes him or her to accidents or that implies accident as a potential cause of death, the insurance company may deny the inclusion of the clause in the life insurance policy. In addition, insurance companies may also not pay additional benefits for policyholders who engage in high-risk occupations. If for instance, an insured who works as a driver for highly flammable materials encountered an accident and died therefrom, his beneficiaries may receive additional payment from the employer but not from the insurance provider because the work is considered hazardous and excluded in the coverage. However there are many insurance policies which cover hazardous jobs as part of an accidental death benefit rider.
Accidents are ranked as the fifth leading cause of mortality in the United States. It not just affects the persons involved in the accident but also their families. The accidental death benefit rider only requires a small amount to be added in the policy and it ensures protection to the surviving family from financial burdens in the event that an insured person dies.