How Are Accidents Covered Under Term Insurance?

IndiaFirst Life
• 03 Jun, 2025

Accidents can impact one's life in various ways. While the physical injuries are difficult to deal with on their own, the financial toll of an accident can be very high, too. The injured and their family will require financial support to deal with the sudden medical expenses as well as the consequent loss of income.

If you are the breadwinner for your family, an accident may mean that your income is affected since you may not be able to work as you used to. One way of ensuring this does not affect your family’s everyday financial life is to have a term insurance policy. Term insurance covers accidental death as well as other repercussions of the accident, depending on the policy.

Understanding How Term Insurance Covers Accidents

A major accident can result in two unfortunate scenarios: either the life assured passes away, or they suffer grievous harm. In both situations, the financial consequences can be severe.

Term insurance can help in both cases. Term insurance covers accidental death, that is the first scenario mentioned above. In addition, you can also opt for specific riders that cover serious disabilities that occur as a result of the accident. The financial payouts from these can support you during challenging times.

Let’s look at each type of coverage in detail.

Accidental Death Benefit Coverage in Term Insurance

For the uninitiated, term life insurance is a pure protection plan. This means that its main motive is to provide financial protection against the demise of the individual.

Term insurance coverage also extends if the demise occurs due to an accident. The nominee/s of the life insurance policy will receive the sum assured payout as laid down in the policy.

However, an accidental death can be different from a natural or a health-induced demise. It is unexpected. Hence, one may need extra financial planning for such an unforeseen event. This is where the accidental death benefit (ADB) rider can step in.

Accidental Death Benefit Rider

You can opt for the accidental death benefit rider in term insurance as an addition to your base plan. It increases the financial payout you receive in case of an accidental death of the insured. With this rider, the family will receive extra financial support to bear difficult times with dignity. The payout from the rider will be in addition to the sum assured amount, thus ensuring solid support to your loved ones.

But what if the accident does not lead to the demise of the individual, but leaves them severely disabled and in a financial crunch? Term insurance offers a solution for this situation as well.

Accidental Disabilities Rider in Term Insurance

Sometimes, an accident may not lead to the individual’s demise, but it may lead to severe disabilities. If the concerned person provides the main source of income for their family, it can complicate things.
The family may need financial support to deal with the medical treatment after the accident. In addition, the injured individual may also lose their employment as a result of the disability. This means they will also require an external source of income to support themselves and their family in the long run.
You can opt for the accidental total and permanent disability (ATPD) rider with your life insurance policy to help deal with these issues. With the ATPD rider, the insurer pays a lump sum amount if the insured is clinically diagnosed with a total and permanent disability due to the accident.
You can use the lump sum payout from this rider to pay for medical treatment, cover daily expenses, take care of children’s education fees, and more. In the absence of a regular salary, the payout can act as a financial backup and allow your loved ones to live a life free from financial stress.
Your term life insurance coverage continues to be active even after you receive the ATPD rider payout, if timely premiums are paid.

Should You Opt for Additional Riders Against Accidents?

Your term insurance covers accidental death by default. However, opting for the ADB and ATPD riders can increase the term insurance benefits you can claim. It provides a better peace of mind. It can help you rest assured that your family is financially secure regardless of any unforeseen events.

The accidental death and disabilities riders are highly recommended if you:

Work in a high-risk occupation
Are the sole earning member of the family
Have several financial responsibilities (loans, children’s fees, parent’s medical bills, etc.)

You can use a term insurance calculator to get an estimate of what your premium will be if you opt for the riders.

In conclusion, term insurance covers accidental death. But opting for additional coverage can be a wise idea. The accidental death benefit rider in term insurance can boost the financial support your family will receive. Adding the ATPD rider can further increase the term life insurance coverage by protecting your finances against accidental disabilities.

Accidents can cause damage that goes beyond the physical. With the right financial planning, you can be certain that your loved ones have the support they need.

by IndiaFirst Life
Headquartered in Mumbai, IndiaFirst Life Insurance Company Limited (IndiaFirst Life), with a paid-up share capital of INR 754.37 crore, is one of the fastest growing private life insurers in India in terms of New Business IRP in Fiscal 2023. Our key differentiators are our simple, easy-to-understand products that are optimally priced. As of Sept 30, 2023, we offered 30 retail products, 13 group products along with six riders (across retail and group portfolios), along with policies under the PMJJBY scheme, catering to protection, savings, health and retirement needs of our customers, leveraging multiple distribution capabilities and augmenting various investment options. In all propositions under the categories of Participating Plans, Non-Participating Savings Plans, Non-Participating Protection Plans, Unit Linked Insurance Plans, Group Protection Plans, Corporate Funds Plans, Riders & PMJJBY form a complete suite of offerings that help our customers prepare for the certainties of life. Our products are easy to understand and optimally priced with a developed comprehensive risk management framework/policy.