What Is an Accidental Death Benefit?

The accidental death benefit is a payment due to the beneficiary of an accidental death insurance policy, which is often a clause or rider connected to a life insurance policy. The accidental death benefit is usually an amount paid in addition to the standard benefit payable if the insured died of natural causes.

Depending on the issuer of the policy, the accidental death benefit may extend up to a year after the initial accident occurred, so long as the accident led to the insured's death.

Understanding Accidental Death Benefits

Accidental death, as defined in accidental death insurance policies, is any death strictly due to an accident. It typically excludes such things as acts of war and death caused by illegal activities, etc. Any hazardous hobbies that the insured regularly engages in are generally specifically excluded as well. In the case of a fatal accident, death usually must occur within a period specified in the policy.

An accidental death benefit generally covers any death that occurs due to an accident.

People who work in or around potentially hazardous environments or who drive more than average (either professionally or as a commuter) should consider accidental death benefit riders. 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 employer usually pays the entire premium).
  • Dependents. Some group accidental death benefit plans also provide coverage for dependents.

Key Takeaways

  • An accidental death benefit is included in an accidental death insurance policy.
  • Accidental death benefits are intended to cover deaths due to accidents.
  • Certain jobs and workers in dangerous environments should consider an accidental death benefit rider.

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 will receive the $500,000 life insurance benefit plus the $1 million accidental death benefit for a total payout of $1.5 million.