What is Accidental Death Benefit?

An accidental death benefit (sometimes called double indemnity) clause or rider, which may be added to most life insurance contracts, provides that double (or other multiple) of the face amount is payable if the assured dies as a result of an accident. From a financial planning standpoint, there is no reason why double or triple the policy face amount should be paid for an accidental death, as compared with death from other causes. The financial loss to the family is equally great irrespective of the cause of death. Moreover, with respect to most persons, the likelihood of accidental death is less than the likelihood of death from other causes. The clause has value, of course, and its comparatively low premium reflects the relatively low probability of loss. The small premium, coupled with the belief (erroneous for the most part) by most persons that if they die, the cause of death will be an accident, are probably the main reasons for its appeal.
Definition of Accidental Death
A typical clause includes the following definition of accidental death:
Death resulting from bodily injury affected solely through external, violent, and accidental means independently and exclusively of all other causes, with death occurring within 90 days after such injury. The expression accidental means insists that both the cause and result of the death must be accidental, as discussed in the preceding chapter. The intention of this wording is to limit coverage to deaths that are purely and entirely accidental, although many U.S. courts have ascribed a more liberal interpretation to the terms.
Exclusions
Payments from certain causes of death are explicitly excluded by the accidental death benefit provision. The rather numerous exclusions in the accidental death benefit clause indicate the practical difficulties inherent in this form of coverage. Typically, deaths from the following causes are excluded:
1. certain illegal activities
2. An accident was involved but in which illness, disease, or mental infirmity was also involved
3. Certain specified causes in which considerable doubt may exist about the accidental character of the death
4.war
5. Aviation, except for passenger travel on scheduled airlines
Time and Age Limit
to be covered, death typically must occur within 90 days of an accident. The purpose of this restriction is to ensure that the accident is the sole cause of death. In general, the time limitations are enforced, although some serious problems can be created, with some courts holding that the 90-day requirement need not be strictly applied. Accidental death coverage usually expires at age 65 or 70. Most insurers’ grade premium charges by age at issue, and a number of companies now offer multiple indemnity (two, three, or more times the face amount) coverage.