Should You Add the Accidental Death Benefit Rider?

One of the first life insurance claims I had, the lady died in an accident. She had the accidental death benefit rider on her policy which doubled the face amount of her life insurance. At the time I wrote her policy, I wasn’t big on adding accidental death benefit but she wanted to add it so I did.

Not too long after, I had another life insurance claim for another lady who had also died in accident. However, in her case, she decided not to add the accidental death benefit. While the policy still paid out, it did not double the face amount.

I remember when the second lady bought her life insurance, we briefly discussed whether or not she should add the ADB rider to her life insurance. It was pretty cheap, so cheap she should have added it. She kind of hesitated when she said she didn’t want to add it. I didn’t say anything and moved on.

From that point on, my opinion changed some about whether or not you should add the accidental death benefit rider. Because of that, I at least make sure I do a good job of explaining the ADB rider and offer the option to everyone who buys a policy.

What is the accidental death benefit rider?

The accidental death benefit rider is one of several riders you can add to your life insurance for an extra premium. If you add it and die in an accident, it will double the face amount. In the past, it was called double indemnity - since it doubles the face amount. However, these days, it’s usually just called ADB - accidental death benefit.

The difference between ADB and AD&D

Many people incorrectly assume that the ADB rider is the same as another rider called AD&D - or accidental death and dismemberment. AD&D provides two potential benefits. One benefit is that it doubles your life insurance if you die in an accident. The second benefit is that it also pays for dismemberment benefits. Dismemberment is if have an accident and lose a hand, limb or other injury classified as dismemberment by the policy.

The difference between ADB and AD&D is that ADB doesn't include any dismemberment benefits. I would say that ADB is more common on individually purchased life insurance policies. AD&D is more common in group life insurance or for stand alone accidental death & dismemberment plans.

Accidental death benefit rider exclusions

The accidental death benefit rider will only pay a benefit if you die in an accident. If you die of natural causes, then the ADB rider would not pay double. 

There are other potential types of accidental deaths that might be excluded and those vary by policy. In addition to natural causes, you can also expect things like skydiving, race car driving, suicide, criminal activities and things like acts of war could and probably will be excluded.

In addition, coverage under an ADB rider will often end at age 70. If that's the case, any accidental death that occurs after age 70 wouldn't be covered.

Again this will vary by policy and so you'll need to read your policy to see exactly what types of exclusions there are.

For accidental deaths that would be covered under the rider, you can read the article I wrote where I give a list of examples of what the insurance company would consider accidental death.

When should buy the accidental death benefit rider?

Since the odds of dying in the United States by accident is around 5%, some people don't see the need to add the ADB rider. Statistically, it is true, that you are more likely to die by natural causes than by accident. 

However, if we use that logic and go by pure statistics, nobody should buy term insurance either. That's because it's estimated that only 2% of all term life insurance policies pay out and yet lots of people are advised to buy term life insurance every day.

Because I've seen a fair number of accident related claims in my career, you might consider the following things when deciding whether or not to add an ADB rider.

• Is it cheap to add? If it doesn't cost very much to add, then I'd add it.
• Can you afford it? If you can afford it, I'd consider it.
• Are you at a greater risk of being in accident? If you ride motorcycles, travel a lot or are involved in other hazardous activities that aren't excluded in the policy, then I'd really consider it. In some cases, ADB riders actually pay an additional benefit if you die in a common carrier accident.
• Are you otherwise uninsurable? If you pick up some life insurance through work and max out what you can get without any medical questions, an ADB rider might allow you to bump up your life insurance in the event of an accident. This would be life insurance you might not have gotten any other way. Remember though, if you do die by natural causes, then of course the ADB will not pay a benefit.

As always, you don't want to rely totally on accidental death benefits. As I mentioned above, you are more likely to die of natural causes than by accident.

Any accidental death benefit payment is just extra to help your beneficiaries.

Conclusion

Over the years, my stance on the accidental death benefit rider has changed from thinking you should never add it to considering it.

One of the reasons why is because I've seen many accidental deaths occur over the years.

Remember though, that accidental death coverage (either in ADB rider form or stand alone policies) is no substitute for life insurance that pays whether you are in an accident or of natural causes. 

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