Do you know what makes Ditto stand out from its competitors? We don’t sell policies at random. We take the time to consider what cover you specifically need.
Take, for example, the Accidental Death Benefit Rider in term insurance plans -
A client had approached us requesting that he be covered by a term insurance plan of our choice. His only request was that he needs an Accidental Death Benefit Rider. When we asked why, he said that he had recently witnessed a horrifying accident and needed a term insurance plan that would cover his family in case he passed away due to an accident.
Now, while we applauded his decision to purchase a term insurance plan, we were not on the same page regarding his decision to buy an additional Accident Death Benefit Rider. After all, he wasn’t a frequent traveller or wasn’t involved in any risky occupation. Additionally, what he didn’t know was that a vanilla term insurance plan automatically covers deaths caused by accidents.
That said, we took up this example to explain that while Accidental Death Benefit Rider may not be a mandatory requirement with every term insurance plan and may not be everyone’s calling, there are some cases in which this term insurance rider is a lucrative addition. Let’s get into the details of this rider, acknowledge if and when you need this rider, what the pros and cons of this rider are in term insurance plans, and what the best term insurance policies are offering this rider.
Best Term Insurance Plans with Accidental Death Benefit Rider
What is the Accidental Death Benefit Rider in Term Insurance Plans?
Much like the name suggests, the Accidental Death Benefit Rider in term insurance plans is an additional payout (over and above the base sum assured) that is offered to the nominee in case the policyholder passes away due to an accident.
Here are 2 examples to get a better understanding of how Accidental Death Benefit Rider works in term insurance plans -
Rajesh is 30 years old with a term insurance plan (up until he is 65 years old) worth ₹2 crores and an Accidental Death Benefit Rider of up to ₹1 crore.
Should You Opt for a Term Insurance Policy with Accidental Death Benefit Rider?
Remember our client from the example we cited in the introduction of this blog? Well, reiterating the concept - just remember that the Accidental Death Benefit Rider in Term Insurance plans only work if your lifestyle and occupation demands it.
That said, here’s a look at the pros and cons of Accidental Death Benefit riders in term insurance policies. Weigh them out and decide for yourself!
- What are the Pros of Accidental Death Benefit Rider in Term Insurance Plans?
- Additional coverage at a nominal premium hike - If you opt for this rider, you can get a pocket-friendly shot at boosting your payout since riders generally demand lower premiums.
2. What are the Cons of Accidental Death Benefit Rider in Term Insurance Plans?
- Limited choices - Accidental Death Benefit Rider is not offered with all the top-term insurance plans. Thus, you limit your choices substantially for a rider that may or may not be adding value to your policy.
- Niche conditions apply for the payout - A boost to the base sum assured would have ensured that your nominee gets a higher cover amount, irrespective of the reason for your death. On the other hand, when you opt for an Accidental Death Benefit (ADB) Rider, you make a choice about restricting your payout with conditions related to the cause of your death. Again, if you pass away for any other reason that's not accidental, your nominee loses out on the ADB sum completely.
- Redundancy - Vanilla term insurance plans, in general, offer coverage and complete payout in the case of the policyholder’s death following an accident. Under such circumstances, the real question is, do you really need this rider?
The answer to that last question is - “maybe.” actually, there are a few scenarios under which availing of an Accidental Death Benefit Rider might make sense -
CASE 1: If the policyholder travels a lot due to personal or professional reasons.
CASE 2: If the policyholder has a lower income slab and hence lacks the eligibility criteria to get a higher cover amount. In this case, the Accidental Death Benefit Rider can provide a quick and cheap boost to the base cover amount.
What are the best term insurance plans with an Accidental Death Benefit Rider?
- Max Life Smart Secure Plus - This term insurance plan from Max Life, a leading private insurer, is comprehensive and affordable. It includes benefits such as Accidental Death Benefits, Zero Cost Term Plan options, coverage boost to account for inflation, Waiver of Premiums for accidental total and permanent disability or critical illness, Critical Illness Rider, top-up option post-purchase, Total Permanent Disability Rider, in-built terminal illness coverage, and maturity benefits through premium returns. It's particularly advantageous for smokers, offering lower premiums compared to similar plans.
Drawbacks: Despite including a terminal illness benefit, insurers only pay a partial sum assured upon diagnosis of a terminal ailment with a poor prognosis and a few months to live, as certified by a doctor.
2. Bajaj Life eTouch: Bajaj Allianz Life Insurance's e-Touch plan is highly favoured among their term offerings despite lacking some critical features. Key benefits include affordable premiums (among the industry's lowest), extensive coverage up to ₹50 lakhs or ₹10 crores depending on income, and three variants: Life Shield, Life Shield Plus, and Life Shield Return of Premium. It offers various feature and rider combinations like death benefits, terminal illness cover, waiver of premium, accidental death benefit rider, and return of premiums, tailored to different policyholder needs.
Drawbacks: One major drawback is the absence of Critical Illness (CI) coverage, either as an included feature or an optional rider. Given the significance of CI protection, this is a notable limitation.
3. ICICI Prudential iProtect Smart: This term insurance plan, inclusive of a critical illness rider, is an excellent and affordable choice, offering comprehensive features. It provides lower premiums for smokers, a significant advantage as they typically face double premiums compared to non-smokers. Key features include Accidental Death Benefit Rider, Zero Cost Term Plan Option, Terminal Illness Benefit, Life Stage Benefit Option, Waiver of Premium in case of total permanent disability, and maturity benefits in the form of premium returns.
Drawbacks: The plan lacks provisions to increase the base cover amount with inflation and excludes riders for total and permanent disability. Moreover, it only offers a standard Critical Illness Rider without accelerated payout options, where benefits are paid in addition to the base sum assured.
4. HDFC LIFE Click 2 Protect Life: HDFC Life, a leading insurance provider, demonstrates strong credibility metrics. Their Click 2 Protect Life policy is ideal for term insurance seekers with a critical illness rider. It includes:
- Accidental death benefit rider
- Waiver of premium for critical illness and total permanent disability
- Total and permanent disability rider
- Critical illness rider
- Maturity benefits with premium returns
Drawbacks: Regrettably, HDFC Life's Click 2 Protect Life plan lacks key features found in similar policies. It does not include a zero-cost option, terminal illness benefits, a top-up option, or inflation-based cover increases. Moreover, like other HDFC Life plans, it tends to be more expensive.
5. TATA AIA Maha Raksha Supreme: This highly affordable term insurance plan from TATA AIA has garnered considerable popularity. With outstanding credibility metrics like Claim Settlement Ratio, Amount Settlement Ratio, and low complaint volume, it outshines competitors. The TATA AIA Maha Raksha Supreme policy includes essential features such as Accidental Death Benefit, Waiver of Premium for accidental total and permanent disability, Critical Illness Rider, and Total Permanent Disability Rider.
Drawbacks: TATA AIA has faced recent operational efficiency challenges, potentially posing a hurdle. Moreover, the plan is restricted to individuals earning over ₹15 lakhs per annum and seeking cover amounts exceeding ₹2 crores.
Conclusion
Accidental Death Benefit Rider in Term Insurance isn’t exactly a mandatory lookout when you are seeking a term insurance plan. Since term insurance plans, in general, cover this kind of death, the rider becomes a tad bit redundant unless you are a frequent traveller or are falling short in terms of your eligibility criteria to get a higher cover amount.
However, we would still recommend that you try to boost your cover amount so that the death benefit payout is high, irrespective of the reason for the policyholder’s death.
