Are Life Insurance Policies Designed To Pay Double The Coverage In Case Of An Accident?
Posted January 4, 2010 – 10:18 pm in: structured settlements FAQI heard it somewhere that if the death benefit is X dollars and the person dies from an auto accident, a fall from a boat or gets killed while walking a dog — The insurance companies pay double the coverage. I think it is insane. I have a $5 bet that it is incorrect. Please answer.
Tags: Accident, Case, Coverage, Designed, Double, Insurance, Life, Policies
5 Comments
I believe you owe someone $5.
On our life insurance policies you can add the “Accidental Death” rider to almost any policy. It is not a huge addition to the premium. Example: Client (30 year old male, non-smoker) buys a $250,000 whole life policy. He can add the Accidental Death benefit for another $250,000 if he dies in an accident for only about 8.5% or the original premium. So in this case he is paying $210/month for his original policy and now adds $17.50 for another $250,000 if he dies in an accident. You can make it 2x or even 3x the original amount for more money. Used mostly for people who travel a lot or just want to be covered in the event of an accident.
Read the fine print. Some policies offer the coverage you describe as an included benefit, some treat it like an option that you pay extra for, and some don’t offer it at all.
So if your bet is that all policies do this then you win $5. If your bet is whether this ever happens then you are probably going to have to pony up the $5. If it deals with a specific policy then you two need to read the fine print on the policy.
That’s called a double indemnity clause, and is usually on ACCIDENT policies, not standard LIFE insurance.
Generally life insurance products are stand alone products which means it can address future liabilities arising from the risks it covered as in the case of life insurance, the risk covered there is naturally the policyholder’s life. However, if the policyholder wanted an extra coverage that are not featured in the basic life insurance policy, then he can avail so by attaching riders such as accident insurance riders, waiver of premium due to disability riders,etc. These riders comes with additional premiums paid on top of the basic premium. So in this particular case, if additional premium is paid for accidental death benefit rider, then the coverage becomes double if the cause of death is by accident.
Some policies are written to double indemnity due to accidental death. You would have to read the fine print on your policy to know this.
You would lose the $5.00.