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- Accidental death benefit policies provide a payout if a death was caused by an accident.
- There are restrictions on both timing of the accident and death, as well as what is considered an accident.
- Accidental death benefit coverage may be from a standalone life insurance policy or a rider attached to a life insurance policy.
What is accidental death benefit insurance?
An accidental death benefit (ADB) can be purchased as a standalone life insurance policy or as a supplemental policy rider. When added to an existing life insurance policy, it can provide an additional death benefit payout.
An ADB pays out only in the event your death was the result of a covered accident or caused by injuries from such an accident within 90 days of the event.
Accidental death benefit policies are typically available to people between the ages of 20 and 59 years of age, with coverage amounts between $50,000 and $500,000. Some exclusions apply to ADB payouts, mostly in regard to reckless or illegal behavior.
Understanding the restrictions
Accidental death policies are meant to pay only in the event of death due to an accident as defined by the policy. In the case of a fatal accident, death usually must occur within a period specified in the policy. In general, there are certain causes of death or contributing circumstances to a death that can negate an ADB payout.
The number and type of exclusions could vary by state and/or carrier. For example, an exclusion could include – but not be limited to – death caused during war or committing a felony.
How does an accidental death benefit work?
The accidental death benefit is an amount paid out from your standalone ADB policy, or in addition to your standard life insurance death benefit as a rider. An ADB policy typically pays out in full until you reach a predetermined age. It then pays half of the face value of the policy until the policy expires. An ADB rider follows the coverage terms of your life insurance.
Examples of situations in which the ADB payout would apply include:
Melissa is 58 when she sustains severe injuries in an accident at work. Melissa dies from her injuries after 62 days have passed. The only substance in her system at the time of the accident was a doctor prescribed medication, and it was within the limits prescribed for her. Melissa’s main life insurance policy’s death benefit is $100,000. Melissa’s beneficiary will receive the $100,000 from the accidental death benefit policy and may receive other death benefit payouts based on any additional life insurance policies in force when she died.
John is 76 years old when his death is caused by a car accident. John dies instantly. There was no alcohol or other substance in his system. He wasn’t driving recklessly and was wearing his seatbelt. John’s main life insurance policy’s death benefit is $800,000. The ADB policy originally provided an additional $300,000 worth of coverage, but since John is over the age of 70, it only pays out half that amount. John’s beneficiary will receive $950,000.
What is covered?
The types of death that will provide a death benefit under accidental death insurance can vary, especially based on your exposure to risky activities or professions that may increase the likelihood of accidents. To understand your coverage for accidental death, it is best to contact your insurer to discuss coverage.
More generally, accidental death benefits are typically paid out for accidents including car accidents, fire-related injuries, falls, accidental firearm deaths, and homicide.
Additional riders that can be added to a life insurance policy
Adding riders can make your life insurance policy more valuable and effective. Examples of additional riders include:
