Accidental Death Benefit

An accidental death benefit is an added benefit that protects your family if you should lose your life accidentally. Whether it is part of your regular insurance policy or a separate policy, the benefits remain the same.

1. Overview

Not everyone thinks of an accidental death benefit when purchasing term life insurance. In fact, most people only think of it when their employer offers it as a benefit, or their main insurance policy offers riders for accidental death. Perhaps there may be those who do not even grasp the concept of an accidental death benefit rider because they have never been offered the opportunity to purchase one. The coverage offered with an accidental death benefit rider can make the difference in the financial well being of the surviving family members, especially if the accidental death benefit is higher than the face value of the policy.

Many times, riders for accidental death offer double or triple indemnity. That means the face value of the policy is increased by that amount in the case of an accidental death. An accidental death benefit can relate to many different types of situations including a work-related accident, automobile accident, or any other type of accident that has a fatal ending. Many people who cannot afford the premiums for a life insurance policy will often purchase an accidental death benefit policy. The reason behind this line of thinking is the likelihood of someone being killed in some type of accident rather than by other means. These specialty policies are less expensive than a term life or whole life policy, so there is more incentive to purchase a policy that pays an accidental death benefit.

2. Making The Right Decision

No matter how old or young you are, there is always a possibility that something can happen to create the need for an accidental death benefit for your family. You can walk out your front door and be hit by a car as you attempt to cross the street, and if you have nothing for your family, the financial struggles can be difficult for them to handle. Funeral expenses alone can run well over $10,000, and while many people plan for the future with term life insurance, many do not think of adding an accidental death benefit rider. Although these same people may indeed have other insurance, the additional protection of an accidental death benefit rider is not their highest priority.

It's important to have riders on your insurance policy that provide an accidental death benefit. Depending on the nature of your employment, you may wish to increase this benefit to three or four times the face value of your policy in order to assure your family's security. You need to look at your lifestyle before you make a decision one way or another, and though everyone is likely to be subject to accidental death, some occupations are more accident prone than others. Your occupation also will determine how much accidental death benefit is necessary.

3. Choosing A Provider

Unless your employer provides accidental death benefit insurance, you may typically think your current life insurance carrier is the best choice for an accidental death benefit rider. Certainly, there is some benefit in choosing someone with whom you are familiar, but there is also good reason to make inquiries of others in the industry, as well. When adding any new insurance, you want to make sure you have the best possible coverage, even if it means having a different carrier for different types of insurance. There was a time when an insurance company would fight to keep your business, but with the larger population today, they know when they lose one customer, they will gain another, so they are less likely to match the quotes of competitors than when our parents and grandparents were buying insurance.

You must take the time to make inquiries of more than one insurance carrier in order to find the right provider. You need to know what you want and what you expect of the company you choose. Most accidental death benefit riders carry at least double indemnity. However, if you work in a field that may place you in a dangerous situation on a daily basis, you may wish to find a carrier that offers triple indemnity or more. People expect you to die some time after you retire and plan accordingly, but accidental death is never expected.

4. Weighing The Benefits

Even if you have term life or whole life insurance, they may not be sufficient in the case of an accidental death. As already stated, when one lives past retirement age, death is expected at some point. Even if you are in great health, when you reach 65 or 70 years old, you have likely set aside money to take care of your spouse, children, and maybe grandchildren. By that point in your life, your children have graduated from college and are probably married with children of their own. In addition, your mortgage may be paid and most of your loans paid in full.

On the other hand, accidental death will be unexpected, and many people still have mortgages to pay and children to educate. If accidental death encompasses the major breadwinner, the situation is even more severe. The extra protection that is a part of the accidental death benefit rider can make the difference between your family living comfortably and struggling to make ends meet. Certainly, you can increase the face value of your life insurance policy, but adding an accidental death benefit rider can be much less expensive. Even with a less expensive term life policy, your best financial choice is an accidental death benefit rider instead of an increase in the face value of the entire policy.

5. How Important Is An Accidental Death Benefit Rider?

When you look at the way people live their lives today, you'll better understand the importance of the accidental death benefit rider. With modern technology comes a decrease in the safety of those who use it. For example, our grandparents used a push mower to do the lawn, so unless you cut your fingers or toes on the blades, there was little else that could happen. Today, with power and electric lawn mowers, the chances of an accident have more than doubled. Accidents such as debris flying from under the blades and hitting someone to bare feet going underneath the machine are commonplace.

Although industrial accidents are more common, it is the everyday injuries that are more likely to happen. Cars no longer travel at maximum speeds of 40 miles per hour because we have paved roads and major highways. That doesn't mean we should go back to living in the past, but we must be more cognizant of the things that can happen as a result of the new technology and prepare accordingly. We must make certain the futures of our children are protected in case we are not there to provide for them because of an accidental death. Though it will not happen to everyone, there is a need to prepare for the worst case scenario.

6. Choosing The Right Benefit Amount

There is no magic formula to decide how much accidental death benefit you should select. There are many factors you must consider such as the standard of living your family currently enjoys, the surviving spouse's ability to continue to support them in the same manner, the current state of your finances, and the ages of your children. There is more need for additional benefits on your riders if you have children not yet of college age, or your spouse lacks the skills to provide the same standard of living as you are currently giving. If you are the only breadwinner, and there are children not yet in school, you want to decide whether you want your wife to have to go to work.

Many different factors come into the picture before you decide how much accidental death benefit you need. Many people don't like to even think of the possibility of dying accidentally, but unfortunately it happens way too often. If you get into your car to go to the corner store, you run the risk of facing accidental death because of someone else's negligence. To avoid the effect on your family resulting from someone else's negligence, you want to have enough accidental death benefit for them to continue the same standard of living to which they have become accustomed.

7. Defining An Accidental Death

If you're not certain just what constitutes an accidental death, it is any time death occurs for reasons other than natural causes or disease or illness. Some examples include an automobile accident, a fatal fall, industrial accident, drowning, fire, and homicide, to name a few. There can be others, even including illnesses and disease if the death results from reasons other than the conditions themselves. You must be careful, however, because if you deliberately make yourself fall to cause your own death, your family will not be able to collect accidental death benefits if the insurance company can prove it. In fact, depending on the terms of your policy, they may not collect the life insurance either.

Some insurance companies may have different provisions for paying accidental death benefits, so you want to make sure you know what your accidental death benefit rider covers before you purchase it. You don't want to omit it and have something happen to you, thus leaving your family without full protection for the remainder of their lives. It's essential to have all the facts before you purchase an accidental death benefit rider, but it's most important to know exactly what is covered in terms of accidental death. Most importantly, you need to know what falls into the category of accidental death, so there will be no surprises if your family needs to use the benefits.

8. Purchasing An Accidental Death Benefit Rider

Once you have all the facts you need, you are ready to purchase an accidental death benefit rider. Of course, you may also be able to purchase a separate policy for accidental death through your place of employment, but in most cases you will be purchasing riders to your existing term life or whole life insurance policies. Have all your facts in order and your information documented before you choose the carrier for your accidental death benefit. Research several carriers before you make your final decision, so you know you are purchasing the best coverage for your family.

If you are purchasing your accidental death benefit coverage through your employer, you may not be able to research the carrier, but you do want to read the information they provide and direct any questions you may have to the Human Resources Department or Benefits Administrator. Even though you cannot choose the carrier, you still want to ascertain what is covered under the terms of the policy. If your company does not have the information readily available, they will be able to secure it for you before you sign up for the policy. Find out what the terms of the policy are, how much is payable to your family if you have an accident, and what accidents it covers.

9. Summary

An accidental death benefit rider or policy is an essential part of your obligation to your family. No matter how young you are, you are not immune from accidental death even if you never leave your home. Do not be under the mistaken impression that term life insurance is enough to cover your family in the event of your death because accidents happen quickly and without warning, something for which most people are unprepared. In most cases, life insurance alone does not cover much more than the cost of the funeral unless you buy a policy with a higher face value than you think you need.

Never buy less insurance than what you need because you are young and not expecting to die any time soon. All of us think we are immortal, and unfortunately that often causes us to fail to plan for the future of our families. We fear making a decision that will force us to face the truth of our own immortality, but we must do that in order to protect our families completely. The idea of purchasing accidental death insurance is one you must face without hesitation, and you must do so in the best interests of your loved ones. Remember, once you are gone you cannot provide for their needs.
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