🙏Simply put: Accidental death benefit – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/portfolio/personal-finance/simply-put-accidental-death-benefit/article66307345.ece

The term policy rider covers death by accident so as to safeguard the term cover payout in case of an unfortunate event.

Two colleagues compare notes on their term insurance benefits and discover a previously unknown cover within the policy.

Varsha: I have been rejecting calls from my insurance provider all of last week and only now did I realise that they were reminders for my premium that is due this year-end. Only on premium due date do I realise I have an active term insurance plan.

Navneet: Term insurance is a simple and a binary product, much like the code we write, on or off.

Varsha: Well I did purchase an accidental death benefit rider, which will branch off into a different payout.

Navneet: Not to be morbid, but isn’t any death covered in a term plan? Why did you purchase this rider as well?

Varsha: Accidental death benefit offers an extra payout on death due to accidents, which is over and above the normal payout on death.

Navneet: Ok the mechanics are clear, but not the intent. Why does one need that coverage as well?

Varsha: Term insurance coverage is meant to replace policyholders’ earning potential in case of an unfortunate event. But, what if one gets into a terrible accident which causes the said unfortunate event. Given the level of medical technology, I am sure the loved ones would commit every resource available to avert the loss. On the flip side, the family would be left with a large medical bill that would certainly make a dent in their finances. This defeats the entire purpose of having a safety net, if a chunk of the net payout has to sacrificed.

Navneet: Ok, this way, term coverage takes care of life goals and accidental payout takes care of medical bills from the accident.

Varsha: Yes and this can bought as a rider which costs from ₹700 per year for ₹10-lakh accidental death cover to ₹12,000 per year for ₹2-crore cover. Remember, this is different from term insurance payout.

Navneet: As per my understanding, medical insurance doesn’t cover accidents. And term cover might seem like a large amount, but spread over education, marriage, pension and retirement, one can ill afford not covering eventualities like accidental death that might claim 15-20 per cent of the payout.

Varsha: Yes, and one more thing. Don’t drink and drive. Nothing covers any accidents caused due to that unhealthy indulgence!

Also read: Make cashless health insurance settlement smooth with these steps

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