With the potential to incur large medical bills and lost wages, accidents can create severe financial hardships, even for insured adults. The implications on their dependents can be more dire if the injured person dies. To address this risk, an accidental death benefit may be offered to an eligible beneficiary if you die from an on-the-job accident not caused by your willful negligence.
Read on to learn what an accidental death benefit is, how it works, and how it compares with a life insurance benefit.
Definition and Examples of Accidental Death Benefit
An accidental death benefit is a type of benefit that must be paid if an insured dies due to a covered accident on the job. Your designated beneficiary receives the accidental death benefit in addition to the face amount of your life insurance policy. Some employers or benefits programs, like the New York Teachers’ Retirement System, may also ensure that your beneficiaries may receive an accidental death benefit if you die due to COVID-19.
- Alternate name: double indemnity benefit
How an Accidental Death Benefit Works
If you die because of an accident that occurs when you’re performing work-related duties, your designated beneficiary will receive an accidental death benefit payout in addition to your life insurance benefit. The on-the-job accident must not be a result of the insured’s willful negligence.
Because the accidental benefit payout is made to your last designated beneficiary, it’s important that you constantly review your retirement information to ascertain whether your beneficiary designations reflect your current desires. Although you may designate any person, trust, or organization to receive your death benefit, it will be paid out in this order:
- Your surviving spouse, known as the primary beneficiary
- Your surviving children until they attain 25 years of age
- A dependent parent or parents
- Any other individual who qualifies as a dependent
You also can designate a contingent beneficiary to receive your death benefit if all your primary beneficiaries die before you. Multiple beneficiaries will share the inheritance equally unless you indicate the specific percentages to be paid. If no beneficiaries exist, the death benefit will be paid to the executors of your will.
The law mandates the distribution of accidental death benefits, so the number of beneficiary designations you provide won’t affect the total benefits payable.
How To Get Accidental Death Benefits
An injured or deceased insured person may not have the chance to file a job-related accident report. Given this, their beneficiary must file for accidental death benefits within two years of the event that caused the insured’s death or benefits will be denied.
If you file for accidental death benefits more than two years after the occurrence of the job-related accident, you still may receive benefits under these circumstances:
- A notice was filed with the retirement board within 90 days of the accident.
- There is a record of workers’ compensation payments for the injury that caused the death.
- There is a record on file in the insured’s department for such an injury sustained.
Your beneficiaries won’t receive accidental death benefits if the death was due to voluntary participation in illegal activity or a hazardous sport, even when the cause of death appeared accidental or unintentional.
Accidental Death Benefit vs. Life Insurance Benefit
Although accidental-death and life insurance benefits are payable to your beneficiaries when you die, your death doesn’t necessarily guarantee a payout. While standard life insurance benefits are paid to your beneficiaries when you die, accidental death benefits are paid out only when the insured dies due to a covered accident.
|Accidental Death Benefit||Life Insurance Benefit|
|Paid out when the cause of death is a covered accident||Paid out when you die of any incident, including an accident|
|Beneficiaries may receive it in addition to your life insurance policy’s face amount||Beneficiaries receive the face amount of your life insurance policy|
|No medical exam is needed to purchase accidental death insurance||You may have to undergo a medical exam to purchase life insurance|
While you can take out either standard life insurance or accidental death insurance as a single policy, your accidental death insurance policy may also be a rider on your life insurance policy. In this case, your beneficiaries will receive your accidental death benefits plus the face amount of your life insurance policy if you die in a qualifying accident.
While both death benefits are payable to your beneficiaries, accidental death insurance shouldn’t be a replacement for life insurance. Instead, it could be purchased as supplemental life insurance.
- Accidental death benefits are paid out to your beneficiaries only when your death was caused by a covered work-related accident.
- The amount of death benefit payable isn’t affected by your chosen beneficiary designations.
- Accidental death benefits may be denied if the death of the insured occurs 90 days or more after the job-related accident and no notice of the incident was filed in that time period.
Teachers’ Retirement System of the City of New York. "Frequently Asked Questions About the Accidental Death Benefit." Accessed Sept. 14, 2021.
Office of the New York State Comptroller. "Accidental Death Benefit." Accessed Sept. 14, 2021.
Mass.gov. "Accidental Death Benefits." Accessed Sept. 14, 2021.
Virginia State Corporation Commission Bureau of Insurance. "Virginia Life Insurance Consumer's Guide," Page 26. Accessed Sept. 14, 2021.