Accidental Death Benefit (ADB)
The term accidental death benefit refers to a clause or rider to an insurance policy that provides for an additional benefit payment if the insured dies as a result of an accident. Individuals that work in hazardous environments should consider adding an accidental death benefit to their life insurance policy.
An accidental death benefit, or ADB, is an additional benefit paid to the beneficiaries of the insured if they die as a result of an accident. This benefit is usually added as a rider or clause to an existing policy and higher premiums are charged to provide this coverage. The amount paid is typically twice the standard coverage if the insured were to pass away due to natural causes.
Insured persons that work in relatively hazardous conditions (as is often found around heavy machinery), or spend a lot of time driving, will choose ADB since it’s less costly than increasing the amount of standard coverage. That is to say, it’s more efficient to purchase the rider than pay for a higher standard benefit amount. When a fatal accident happens, death must occur within a specified period of time. For example, if the insured is severely injured in a fall, the accidental death benefit may only be paid if the policyholder passes away in the next twelve months.
Policies oftentimes explicitly exclude accidental death caused by hazardous hobbies such as sky diving, mountaineering, scuba diving, and rock climbing. They also often exclude paying benefits when death occurs due to acts of war, if the insured engages in illegal activities, when death is self-inflicted, or is a result of a drug overdose. Riders also typically terminate when the insured reaches age 70. All of the above benefits and exclusions will be clearly spelled out in the insurance policy documentation.