United States
Hong KongAccidental death and dismemberment
The rider pays an additional benefit if death is accidental, often equal to the face amount, and pays scheduled amounts for dismemberment such as loss of limbs or sight. Death must occur within a stated period after the accident, and the rider usually expires at an age while the base policy continues.
This rider is cheap because the risk it covers is rare, and it is examined because the definition of accidental does more work than candidates expect. Two people die of the same thing. One claim pays double, one does not, and the difference is in the wording.
The two halves of the benefit
| Half | Trigger | Amount |
|---|---|---|
| Accidental death | Death by accidental means, within a stated period after the accident | The principal sum, often equal to the face amount |
| Dismemberment | Loss of limbs or sight, as the schedule defines loss | The capital sum, a stated fraction of the principal for each loss |
Principal sum for death. Capital sum for dismemberment. A schedule in the rider sets what fraction each loss earns, and losing two limbs typically pays the full principal sum where losing one pays a part of it.
Why timing matters
The rider requires that death follow the accident within a period the contract names. Someone injured in a crash who dies long afterward may fall outside it, even though the accident caused the death. That is the most examinable feature of the rider, because it is the one that decides whether a sympathetic claim is paid.
The base death benefit is unaffected. If the accidental death benefit fails, the policy still pays its face amount, and a stem that offers you nothing is paid as an option is offering you a distractor.
What is usually excluded
- Death from illness or natural causes, however sudden.
- Suicide, and self-inflicted injury.
- Death while committing a felony.
- War, and in some contracts aviation other than as a fare-paying passenger.
- Death in which an existing illness contributed materially.
The last one is the difficult one. A driver who has a heart attack and crashes has died in an accident and has also died of a heart attack. Contracts handle that with wording about the accident being the sole cause, and stems are built on exactly that ambiguity.
An insured with an accidental death rider suffers a stroke while driving, loses control and is killed in the collision. The rider requires that the accident be the sole cause of death. What is payable?
- The face amount plus the accidental death benefit
- The face amount only
- The accidental death benefit only
- Nothing, because the death arose from an excluded cause
Where the exam puts it
- Section
- II, riders, provisions, options and exclusions, 15 questions
- Listed as
- Riders, sub-item 4
- Also appears
- Section V, as a standalone accident and health product
- Question style
- Claim scenario, cause and timing
Note that second row carefully. Accidental death and dismemberment appears twice in this outline: as a life rider in section II, and as a policy type of its own in section V under accident and health. Same benefit, sold two ways. A stem describing a standalone contract is in the health half of the paper, and one describing an attachment to a life policy is in the life half.
The opinion, and the concession
Do not spend long here. It is probably one question, the exclusions are intuitive, and the principal and capital sum vocabulary takes two minutes. What is worth the time is the sole cause idea, because it is the only place in the life half of the paper where a claim turns on medical causation, and that reasoning is unfamiliar to most candidates.
The concession: the period within which death must follow the accident is a contract term. We hold Pearson's outline and the Texas Insurance Code, and neither sets it, so we do not print a number of days. If a course gives you one as though it were law, it is describing a common market practice.
Common questions
Is an accidental death benefit always double the face amount?
No. It is often equal to the face amount, which is where the name double indemnity comes from, but the rider can state any multiple. The exam tests what triggers the benefit and when, rather than what it multiplies, so read the stem for the cause and the timing.
What is the difference between principal sum and capital sum?
The principal sum is the full amount payable for accidental death. The capital sum is the amount payable for dismemberment, set as a fraction of the principal sum by a schedule in the rider. Losing two limbs typically pays the full principal sum, losing one pays part of it.
Does the rider pay if the insured dies of illness?
No. Death from natural causes is outside the rider, however sudden it was. The base policy still pays its face amount, which is the point candidates most often lose: a failed rider claim does not affect the underlying death benefit the policy already promised.
Where else does AD and D appear on this exam?
In section V, types of accident and health policies, where it is listed as a product in its own right rather than a rider. The benefit is the same and the contract is different, so a stem describing a standalone policy sits in the health half of the paper.