Accidental Disability Benefit Rider in Term Insurance – A Detailed Guide

Life is unpredictable and so life is all about preparing for those unseen, unknown uncertainties. We don’t know what may happen the next moment so it only makes sense to be prepared for the worst. This is what term insurance helps us with. This life insurance policy provides financial coverage against the unfortunate event of death of the life assured.

However, sometimes death may not be the only outcome of an unpredictable mishap, say an accident. It may cause temporary or permanent disability of the affected. In this case, if the affected is also the life assured under a term insurance plan, the insurance company can help provide them additional coverage by offering an extra feature by the name of Accidental Disability Insurance Benefit Rider.

What is Term Insurance Accidental Disability Benefit Rider?

This rider can be purchased in conjunction with the base term insurance policy. It helps extend the insurance coverage of the plan for the life assured. As mentioned above, in case the policyholder suffers any form of disability in the event of an accident, this rider would help provide financial coverage to them and their family during these difficult times.

Note that the rider benefit is also meant to cover total and permanent disability of the life assured in the event of an accident. This would include loss of one or both arms or legs, loss of eyesight, and the like. In such cases, the affected would inevitably suffer loss of income causing a huge financial strain on the family.

It is then that the Accidental Disability Rider comes into force, providing assistance to the family members of the life assured by offering a lump sum amount to cover the costs of the treatment as well as other financial liabilities. The rider also provides the flexibility to the insured to receive this monetary benefit either in a lump sum or in installments every month.

Who Can Buy an Accidental Disability Benefit Rider?

Since this rider is an add-on benefit provided by your insurer over and above the base term insurance plan that you have already purchased, it can be easily bought by the policyholder (the insured covered under the term insurance policy).

However, it is worth noting here that in order to avail the benefit of the Accidental Disability Rider, the minimum age to enter the term insurance plan is 18 years and the maximum entry age is 65 years. The sum assured and the coverage period under the rider are both the same as those promised in the base term insurance policy. Also, the premium payable remains the same throughout the term of the insurance policy. However, the policyholder has a flexible choice to pay the premium either as a single lump sum amount or on a monthly, quarterly, half-yearly, or annual basis.

Benefits of Buying the Accidental Disability Rider with Your Base Term Insurance Plan

Since the rider is an add-on, meaning it needs to be purchased separately with your base term insurance policy, most policyholders opt out of buying one. However, this benefit can prove to be quite useful in future, especially in the case of any unpredictable circumstances. Here are some top benefits of buying the rider in conjunction with your term insurance policy:

1. Covers loss of income: In case of temporary or permanent disability due to accident, the life assured under this rider benefit is promised a monetary benefit by the insurer. This helps cover the loss of income suffered by the insured and their family in such an event (due to inability to work). Under the plan, the policyholder can also opt for monthly payouts as monetary benefit, which would assure a fixed income to them every month and help cover all financial expenses.
2. Covers cost of treatment: Owing to inability to work, the life assured under the term insurance policy may not be able to shell out money to pay the huge costs for the treatment of their disability. By purchasing this add-on rider, the policyholder can be rest assured of receiving complete financial protection for themselves and their family.
3. Provides higher coverage at lower premium rates: By buying the Accidental Disability Rider, the life assured promises extended coverage for themselves under the already purchased term insurance plan. Besides, the premium payable for this rider benefit is also quite nominal and can easily be afforded by the insured.
4. Offers term insurance tax benefit: Sections 80(C) and 10(10D) of the Income Tax Act, 1961 state that the life assured is entitled to double the tax exemption benefits already offered under term insurance, if they buy the Accidental Disability Rider as well. This is basically done to encourage the term insurance policyholder to secure their future by purchasing the additional rider.

What is Excluded Under the Accidental Disability Benefit Rider?

The rider allows the life assured to enjoy extended term insurance coverage with regard to monetary benefit payout in a lump sum in case of temporary or permanent disability caused due to accident. However, there are certain exclusions as well, which the rider does not cover. Some of these are:

• The rider fails to provide insurance coverage in case the policyholder suffers disability 6 months after the accident happened.
• Disability or death caused due to suicide or injuries voluntarily inficted upon onself are excluded from the rider benefit.
• In case the policyholder voluntarily participates in any form of physical violence, such as war, riot, or rebellious activity and suffers physical loss, the rider would not provide protection to the life assured.
• Coverage is not provided under the rider in cases of alcohol or drug abuse.