Should You Add the Accidental Death Benefit (ADB) rider to Your Life Insurance Policy?

Many insurers offer an accidental death, or double indemnity, rider that–for a small additional premium–provides some multiple of the base face amount (typically double) if death is accidental. Most experts feel there is little use for this coverage because the insurance need is rarely tied to the means of death. In fact, a nonaccidental death rider, if it were available, would be a better option, because death benefit needs are likely to be higher if death occurs after a prolonged and expensive illness than if it occurs suddenly as a result of an accident.

If policyowners purchase such a rider, they must take care to determine what the policy means by using the term “accidental” death. Insurers use two different clauses: the “accidental means” and the “accidental death” type clauses. Most companies now use the accidental death clause which provides that when death occurs as a result of accidental bodily injury, the insurer pays the accidental death benefit.

If the contract uses the accidental means clause, both cause and result must have been accidental. The insurer will not pay the ADB if death is accidental but did not occur as a result of an accidental means or cause. For instance, if a person dies as a result of falling down his stairs, it is an accidental death, but it might not qualify for the ADB if the means were not also accidental (he intended to go down the stairs). Only if the fall resulted from an accidental means (he tripped on his child’s roller skate), would the insurer pay the ADB.

Whatever merit an ADB rider may have, it is virtually useless if the insurer uses the accidental means clause to determine when they will pay the ADB. A person probably would be better off taking a chance to spend the additional premium amount on the lottery.

Companies differ with respect to the minimum and maximum ages of coverage under the ADB rider. Some companies do not specify either minimum or maximum ages. Those that do, set age one or five as the minimum age, and most set age seventy as the maximum age, although some set earlier maximum ages, such as age sixty-five or sixty. Companies also differ with respect to the period of time after an accident during which death must occur for the insured to be paid the ADB. Most companies limit the period of time to 90 days, but some set the period at 120 or 180 days or one year. A few companies allow payment as long as the rider is in force.

Finally, some companies offer a curious limited ADB rider that pays a multiple benefits if death occurs on a common carrier, such as an airline, bus, taxi, or train. Some contracts include school buses and private passenger automobiles and/or will pay the ADB if death occurs as a result of being struck while a pedestrian. Once again, unless one has a gambling nature and spends a lot of time on common carriers in high-risk areas, the policyowner would be better off using the premium dollars spent on such an ADB rider to buy additional coverage that will pay off regardless of the cause or means of death.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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