MoneyLife

What Is An Accidental Death Rider?

By Marc Guberti
accidental death rider

Life insurance policies allow people to prepare for the worst. An accidental death rider is a life insurance rider that increases your death benefit if you die in an accident. If enacted, this rider often doubles the death benefit, providing your beneficiaries with bolstered financial protection. An accidental death rider isn’t necessary for everyone, but it’s critical for some workers.

How does an accidental death rider work?

An accidental death rider takes effect if you die in an accident. You will incur additional premiums to integrate this rider within your life insurance policy. Many employees working at dangerous jobs add the accidental death rider to their policy because of their heightened risk. 

Dying early due to an accident can cause significant financial strain on your spouse and heirs. While any life insurance policy’s death benefit will alleviate the economic pain, an enabled accidental death rider allows you to further thrust your family forward from a financial perspective. No policyholder incurs the premiums hoping their accidental death rider gets utilized, but it’s an extra precaution.

What does an accidental death policy cover?

An accidental death policy covers any death deemed as an accident. Car crashes, machinery, and drowning are some of the types of accidental deaths that the rider covers.

Is an accidental death rider also known as a triple indemnity rider?

The accidental death rider is also known as a triple indemnity rider. The rider triples the death benefit if the policyholder dies in an accident on public transportation en route to their destination. In other qualifying accidents, the accidental death rider only doubles the death benefit.

Why would an accidental death rider become void?

The policy does not cover deaths where the policyholder has more control, such as suicide. The rider does not cover deaths from hazardous hobbies because that is more within the policyholder’s control. 

Deaths from illegal activities and service in the armed forces won’t trigger the accidental death policy. Even if the death is accidental, it must occur within a specific timeframe for the rider to take effect.  

Who needs an accidental death rider policy?

An accidental death rider policy makes sense for employees working at dangerous jobs with machinery and other risky elements. If you put yourself in an environment with an increased chance of dying due to an accident, the rider can help. 

Examples of an accidental death rider

If a policyholder dies due to a machinery-related accident at work, the accidental death rider will provide beneficiaries with a boosted death benefit. The same rule applies if a policyholder dies in a car accident. 

However, if the policyholder dies while riding a motorcycle, the accidental death rider will not take effect. Motorcycle riding is considered a hazardous hobby, thus uncovered by the rider.

Accidental death rider factors to consider

An accidental death rider enhances your financial fortress, but it’s not suitable for everyone. Before adding an accidental death rider to your life insurance policy, consider these factors.

Higher premiums

When you add an accidental death rider to your policy, your premiums increase. The moment you stop making premium payments, you lose the death benefit. The accidental death rider isn’t worth the risk if it hurts your ability to pay premiums. When planning your budget, consider future expenses (i.e., college tuition).

Some people take on a return of premium life insurance policy to avoid losing out on their premiums, but this policy is more expensive.

Your risk factor

Working in a safe environment reduces your risk of dying in an accident. The rider makes more sense if you work at a dangerous job where it’s more likely to die in an accident.

Death benefit

Although every policyholder would love to double their death benefit for their loved ones, is your current death benefit sufficient? A high enough death benefit can provide enough confidence rather than warranting the need for an accidental death rider. You can also put the premiums from the accidental death rider into pursuing a higher death benefit. 

Investing elsewhere

The money you invest into an accidental death rider policy can’t go anywhere else. Some people forgo life insurance policies and invest the money instead, hoping to earn a higher return on their investments. While this approach carries risks, you don’t have to keep up with monthly premiums. Some investments outperform life insurance policies.

Unfamiliar with the investing world? Begin your retirement journey with a MoneyLion investment account. For as little as $5 a month, you can set up auto-invest and effortlessly watch your portfolio grow. Learn more here.

Selecting other riders

An accidental death rider is one of the many riders available. It’s challenging to add several riders to your policy due to the premiums, so make sure you select riders that best fit your needs and lifestyle. Some policyholders will forgo the accidental death rider to gain the most protection at the most reasonable price.

Advantages of accidental death rider

An accidental death rider increases the death benefit if you die due to a qualifying accident. Your beneficiaries will carry a heavyweight on their shoulders when you leave. During that time, you don’t want your beneficiaries stressing about their finances. The rider allows you to provide your beneficiaries with additional funds.

Disadvantages of an accidental death rider

The accidental death rider increases your premiums, and not everyone ends up using the rider. Not all accidental deaths qualify for the rider, which means the extra premiums were for nothing. Most riders carry a similar risk where they become helpful if enforced but worthless if your death or other circumstances don’t fulfill the rider’s qualifications.

Accidental death rider vs life insurance 

An accidental death rider is an add-on that will double your death benefit if you die of a qualifying accident. Life insurance without the rider doesn’t double if you die in an accident. Still, your beneficiaries will receive a payout when you die (assuming you either selected whole life insurance or died within the timeframe of term life insurance). An accidental death rider covers a specific type of death, while life insurance provides broader coverage.  

Build up your financial safety net

Life insurance provides an extra wall of financial protection. However, instead of waiting for the worst-case scenario, start building your financial safety net now. MoneyLion’s Financial Safety Net helps millions of members invest into fully managed portfolios, take out cash at 0% APR, and lets you see all of your funds in one place. MoneyLion’s Financial Safety Net makes for a great complement to any life insurance policy. Get started with MoneyLion today.

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