Life is unpredictable, and it is important to ensure your loved ones are protected financially after you are gone. This is where term insurance comes into play.
But many people wonder—does term insurance cover accidental deaths? The simple answer is yes, but there are a few details you should understand.
This article will break it down clearly to help you make an informed decision.
How Does Term Insurance Cover Accidental and Natural Deaths?
Term insurance is a type of life insurance that provides a death benefit to the nominee if the policyholder dies during the policy term.
It typically covers:
- Natural deaths (such as from illnesses or ageing)
- Accidental deaths (such as from a car crash, fall, or other unforeseen events)
Natural Deaths
In the case of natural death, the nominee is assured the full sum. This includes death due to critical illnesses like cancer, heart attacks, or natural ageing.
However, it is important to note that some insurers may deny the claim if the death occurs due to an illness during the waiting period (usually the first 2–3 years of the policy). Always check the policy terms carefully.
Accidental Deaths
Term insurance also covers deaths caused by accidents. If the policyholder dies because of an accident, the nominee will get the basic sum assured mentioned in the policy.
For example, if your term policy sum assured is ₹1 crore, your nominee will receive ₹1 crore in case of death due to a road accident or other covered incidents.
However, the policy must be active at the time of death, and death must not occur due to excluded causes like drug overdose, driving under the influence, or participating in dangerous activities (unless specified otherwise).
Should You Get an Accidental Death Benefit Rider with Term Insurance?
While basic term insurance covers accidental death, you can enhance the protection with an Accidental Death Benefit (ADB) Rider.
An ADB rider is an add-on that you can buy with your base term insurance policy for an extra premium. It provides an additional payout if death occurs due to an accident.
How the Accidental Death Benefit Rider in Term Insurance Works?
Suppose your term insurance policy sum assured is ₹1 crore, and you have an ADB rider of ₹50 lakh. If you die in an accident, your nominee will get ₹1.5 crore (₹1 crore base sum assured + ₹50 lakh rider benefit).
Without the rider, they would only receive the base ₹1 crore.
Is the Rider Necessary?
It depends on your situation. Here are a few reasons why you might consider it:
- Higher Risk Lifestyle: If you frequently travel, drive long distances, or have a hazardous job, an ADB rider can offer valuable extra protection.
- Affordability: ADB riders are usually cheaper than buying a separate accidental death policy.
- Financial Security: The additional sum can help your family handle medical bills, funeral costs, and ongoing living expenses more comfortably.
However, if you already have separate comprehensive accidental insurance, you might not need the rider with your term plan.
Things to Keep in Mind
- Read the policy document carefully to know what types of accidents are covered.
- Check if there are any exclusions related to risky activities or pre-existing conditions.
- Understand the maximum accidental death benefit limit. Some insurers cap it at a certain percentage of the base sum assured.
To summarise, term insurance does cover both natural and accidental deaths, offering crucial financial protection to your family when they need it most. However, if you want an extra layer of security, especially if you live a high-risk lifestyle, opting for an Accidental Death Benefit Rider can be a smart decision.
Remember always to read the fine print, compare policies carefully, and choose a reliable insurer. Buying the right life insurance policy today can ensure peace of mind for you and your loved ones tomorrow.
