Accidental death, as defined in accidental death insurance policies, is any death strictly due to accident. It typically excludes such things as acts of war and death caused by illegal activities, etc. Hazardous hobbies, in which the insured regularly engages, are generally specifically excluded, as well. In the case of a fatal accident, death usually must occur within a period of time specified in the policy.
Accidental death benefit riders should be considered for people who work in or around potentially hazardous environments or who drive more than average (either professionally or as a commuter). They can be used to beef up the benefit paid to beneficiaries. These riders typically end once the insured person reaches age 70.
Four Common Accidental Death Benefit Plans
Group Life Supplement – In this type of arrangement, the accidental death benefit plan is included as part of a group life insurance contract, and the benefit amount is usually the same as that of the group life benefit.
Voluntary – The accidental death benefit plan is offered to members of a group as a separate, elective benefit. For this type, premiums are generally paid in a payroll deduction.
Travel Accident (e.g. Business Trip) – The accidental death benefit plan in this arrangement is provided through an employee benefit plan and provides supplemental accident protection to workers while they are traveling on company business (the entire premium is usually paid by the employer).
Dependents – Some group accidental death benefit plans also provide coverage for dependents.
How Accidental Death Benefits Work
As a hypothetical example, assume Derrick has a $500,000 life insurance policy with a $1 million accidental death benefit rider. If Derrick dies due to a heart attack (a natural cause), his beneficiary will get $500,000. If he dies as a result of a car accident, his beneficiary would receive the $500,000 life insurance benefit plus the $1 million accidental death benefit for a total payout of $1.5 million.