Accidental Death Benefit

What is an Accidental Death Benefit?


Meaning of an Accidental Death Benefit and how it Works

The accidental death benefit works just like an insurance policy and involves paying the agreed benefits to the beneficiary of accidental death policyholder. The accidental benefit plan encompasses the total amount of money including the standard benefit to be paid in a case where an insured individual dies of natural causes. Several accidental death insurance policies have defined accidental death as a death that is strictly due to an accident and excludes deaths that result due to war or illegal activities such as consumption of hard drugs or electric facility vandalization. The definition also exempts deaths that occur as a result of hazardous hobbies engaged in by the policyholder.

An example of how the accidental death benefit works is explained below.

Imagine that Mr. Carter has a life insurance policy of $200,000 and an accidental death benefit rider worth $400,000. If he dies naturally from a health condition, his beneficiary will be entitled to get $200,000 only. However, if he dies as a result of an industrial fire, his beneficiary will get a total of $600,000, the accidental death benefit plan inclusive.

The accidental death benefit varies with insurance companies and can be extended for a specific period of time, either six months or one year, after the accident or hazard that led to the death of the insured individual occurred. In a case where a fatal accident occurs, death must occur within a period of time that is stipulated in the insurance policy agreement.

Insurance companies often advise individuals who work in hazard-prone environments to signup for accidental death insurance benefits. Professional or commute drivers who drive more than the average driving speed are also not left out. The benefits are usually paid out to beneficiaries of the insured, however, when the insured gets to the age 70, the riders benefit comes to an end.

There are several types of accidental death benefit plans and they include the group life supplement, voluntary, travel accident, and dependents benefit plans.

  • The group life supplement benefit plan is a plan where the accidental death benefit plan is added to a group life insurance contract and the amount of the resulting benefit is equal to that of the group life benefit.
  • In the travel accident plan, the benefit is often contained in an employee benefit plan. This type of plan involves a company or employer paying for the premium package that covers employees embarking on business trips for the company.
  • The voluntary plan employs payroll deduction to pay for the premium and the accidental death benefit is usually offered to a separate or specific group of individuals.
  • The dependent benefit plan offers coverage to dependent on the insurance policyholder.



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