When Should You Consider the Accidental Death Benefit Rider (ADB)?
If you work in a field where there is a high probability for accidental injury, yet you can not afford to buy as much insurance as you need, you should consider using the Accidental Death Benefit Rider to supplement your coverage. The Accidental Death Benefit Rider is — as its name implies — protection that applies only to an accidental death, a death
caused directly and solely by a physical injury, that occurs between the age of one and the policy anniversary when you are seventy. The question you need to ask yourself is: What kind of accident am I most in danger of having? Perhaps you spend a lot of time working with heavy machinery or around moving vehicles. Perhaps you do heavy lifting when working or you spend a lot of time on the road. If you find that you are in danger of having a physical accident, resulting in potentially fatal bodily injury, then the ADB may be a good supplement for your insurance plan.
Why Should I Use ADB?
When planning how much life insurance you need, you inevitably consider the unexpected. However, it is expensive to plan for every eventuality and, to some extent, you have to hedge your bets. You engage in a standard cost-benefit analysis. To keep the cost reasonable, you have to assume that you will not die too prematurely; and, barring an
unforeseeable physical accident, this assumption may well bear itself out.
When there is no choice, this kind of compromise is the most reasonable thing you can do. You cover your large commitments like planning to send your children to college or protecting your mortgage. If protecting your business is a concern of yours, you may permanent life insurance to fund a buy-sell agreement. However, you probably have many other contingent responsibilities as well. Perhaps you are in the process of moving and are currently paying two mortgages. Perhaps you are changing careers, pursuing a dream you have always had, and are supporting your family on less income than necessary with the understanding that the situation will ameliorate in the future. Whatever the case, it is not only something you didn't plan for but something that you wouldn't have been able to anticipate when you were engaged in the planning process. Rather than waiting for such a situation to arise and buying more insurance then, you can build such eventualities into your initial plan.
As discussed above, ADB serves to protect your family from a sudden death, from an immediate loss of income that was entirely unforeseeable. However, the benefits of ADB are not limited to a scenario of immediate tragedy; they are applicable for up to a year after an accident, a year in which you may accrue medical bills that would leave your family with
further responsibilities after you're gone. Once injured, purchasing additional insurance may be impractical, even impossible. If your death is a direct result of the accident you had, even eleven months later, your family will receive the additional death benefit, which can be (in most cases, with most policies) worth any amount up to the face amount of the base policy, potentially doubling the death benefit.
ADB is not for everyone, but the potential benefits of having it are well worth considering.
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This material is being provided for informational purposes only. Neither New York Life nor its agents provide legal, tax or accounting advice. Please contact your own advisors for legal, tax and accounting advice.
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