“Although death is certain but the time of death is uncertain. Hence it needs to be provisioned for”. Rider is an additional benefit along a life insurance policy. It cannot be taken on its own. It is considered as an add-on benefit along with the actual policy.
If death occurs through an accident, then it is called Accidental Death and the benefit received by the policyholder due to an accidental death is called Accidental Death Benefit. Usually a certain sum of money is committed as Accidental Death Benefit. It is paid to the nominee if the life insured dies in an accident over and above the base sum assured. It is sometimes double the base sum assured and in that case it is called Double Accidental Death Benefit. This benefit is sometimes an in-built rider which is incorporated within the policy conditions and sometimes an additional rider, where it is available to the policyholder at an extra nominal premium.
Let us consider an example:
Ravi Malhotra purchased a life insurance policy with Base Sum Assured of Rs 20, 00,000 and an additional Accidental Death Benefit rider of an additional Rs 15, 00,000. However, an additional premium also needs to be paid for an additional benefit of rider.
Premium without Rider - Rs.10,000
Premium with Rider - Rs.10,000 + Rs.600 = Rs.10,600
Now if the life insured died a natural death within the policy tenure, then his nominee would receive a sum of only Rs 20, 00,000 as base sum assured.
However, if Ravi dies in an accident, then the nominee would receive an extra Rs 15, 00,000, i.e. he would receive Rs 35, 00,000 in total by spending only a nominal cost of Rs 600 for the additional rider benefit.
Death Benefit - Rs. 20,00,000
Accidental Death Benefit - Rs. 35,00,000
This rider is very beneficial for people who are more accident prone than others. However there may be certain exclusions in the rider terms and conditions as well, which might include aviation, hazardous sports, certain occupation, etc. Since the cost of adding the rider is nominal, it makes most sense to take it if you are accident prone and would like to provide the extra benefit to your family if any “sudden” event like an accident happens!