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Top 3 Questions about Accidental Death and Dismemberment Insurance

Over 60 people were seriously injured when a Kolkata flyover collapsed in March. The accident took place during the peak hours of the day, causing inconvenience to hundreds of office-goers, and permanently damaging the life of some unfortunate few. As their lives were not lost, these people are not eligible for life insurance benefits. Yet severe disabilities may now prevent them from going back to their regular jobs. Those who were seriously injured, received Rs.3 lakhs from the government as compensation. Others received only one lakh. But is this amount sufficient enough?

In comparison, a person with life insurance coverage of Rs.20 lakhs with an accidental dismemberment rider will receive Rs.10 lakhs if he loses use of one limb, and the full amount if he loses his sight as a result of an accident. The accidental death and dismemberment rider for life insurance helps you get the most out of your insurance plan, essentially widening the coverage to include unlikely incidents. But keeping in mind the uniqueness of such events, consider these questions before you take a decision…

Will my regular insurance plan cover accidental death?

If you have opted for the base plan, probably not. While most policies may not exclude accidental death up-front, coverage for accidents is usually included under a premium option. For example, ICICI Prudential’s iProtect Smart does not provide accidental coverage under the Life (basic) and Life & Heath options. However, you can go for premium options like Life Plus and All in One options which do. Please note that in case of accidental dismemberment, the insurer can only get a premium waiver under regular term insurance. He will get no compensation, even with a premium option.

So yes, your regular plan with premium option can cover accidental death, but not accidental dismemberment.

What is accidental dismemberment?

Simple as it may seem to us, insurance providers have very specific definitions of both death and dismemberment. The success of your claim will depend on whether you meet this definition. Only death occurring within a stipulated time after the accident (1 to 6 months depending on your provider) is considered accidental death. Also, accidents resulting from voluntary activities like adventure sports or war, are not covered by this definition. The definition of dismemberment varies widely from company to company. The minimum compensation Tata AIA gives is 2% of sum assured for the loss of use of one joint of a left finger. Max Life however recognizes only the loss of use of eyes or limbs. Keep in mind that uninterrupted loss of use must be recorded for a stipulated period for it to qualify as dismemberment.

Will my accident claim be subtracted from the term coverage?

The rider benefits under a plan usually works independent of the main policy benefits. Under Max Life Insurance’s Death and Dismemberment Rider, the base policy continues as before even after the person makes a successful accident claim. In that case, the rider is terminated. If death occurs within term period, he will get full death benefit.

But once you make a successful claim, you may not be able to reinstate that rider. For example, Kotak Life Insurance does not allow revival of riders independent of the base plan. At the end of your policy, you will receive death/maturity benefits as applicable to your base policy as no such benefits are accrued by opting for this rider.

Here’s a quick look at the top 10 facts about Accidental Death and Dismemberment Insurance:

1. Accident coverage is usually available as a rider, and not as a separate policy.
2. The benefit is provided by many employers as part of group insurance.
3. The premiums are quite low. Eg.Rs.2000 per annum for coverage of Rs.20 lakhs, irrespective of age and gender, under Max Life Insurance
4. Premiums are eligible for usual tax benefits.
5. No loan can be taken based on this rider alone.
6. You cannot add the rider after purchase, but you may remove it on request.
7. Death as a result of infections, even if it occurs after an accident, is usually not covered.
8. Accidents resulting from consumption of drugs and alcohol are not covered.
9. Suicide is not covered.
10. Premium may vary depending on degree occupation risk.

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