Accidental death and dismemberment insurance, also known as AD&D insurance, is supplementary coverage which can be added to traditional life insurance policies. AD&D life insurance offers extra protection and pays you or your beneficiaries in the event of an accidental death or dismemberment due to an accident, greatly easing your financial burden in the incident’s aftermath.
Whether accidental death and dismemberment insurance is worth the extra premium is a question to ask when you compare quotes and rates since coverage restrictions make AD&D less economical than traditional life policies.
What Is AD&D Insurance?
AD&D insurance is a supplemental life insurance rider added to an existing policy that will pay you or your beneficiaries a certain sum of money should you be killed or dismembered in an accident or soon thereafter. Accidental death insurance is the main part of the policy, with the dismemberment portion being supplementary to it.
“Dismemberment” is defined by life insurance companies as the loss of a “member”, meaning a limb (arm, leg, hand or even finger), a significant sense such as sight or hearing, or paralysis. Thus, if an accident results in the direct loss of your eyesight, speech, hearing, or a limb, your carrier will pay out your benefit amount.
How Does AD&D Work?
If a policyholder dies as a direct result of an accident, a full death benefit will be paid out to the policy’s beneficiary. If the policy amount is for $100,000, the benefit will be $100,000. If the policyholder does not die as a result of the accident and instead loses a limb, he/she will receive a 50% benefit payout. Losing two or more limbs would compound for a full benefit payment.
Conversely, if the policyholder loses a finger, toe or is only partially paralyzed, the benefit payout will be graded down according to the insurance company’s loss benefit scale. Read your insurer’s fine print carefully.
Typical Benefit Scale:
- One Member – 50% Payout of Full Benefit
- 1 Hand, Foot, Limb, Sight in One Eye, Hearing in One Ear, Speech
- Partial or Complete Paralysis – 50% Payout of Full Benefit
- Two or More Members – 100% Payout of Full Benefit
Coverage Benefits: Inclusions and Exclusions
Inclusions: AD&D insurance will pay out for “accidents” such as homicide (murder), falls, vehicle accidents, drowning and other events which weren’t the policyholder’s fault. A “qualifying” death, dismemberment or injury has to occur within a few months after the accident and has to be a direct result thereof in order to receive payment of the benefit.
Exclusions: Death or dismemberment from engaging in “extreme” or “high-risk” sports or behaviors (skydiving, drag racing, bungee jumping), infections or illnesses, surgery, and drug overdose are not covered by an accidental death and dismemberment insurance policy.
AD&D insurance can be extended to cover hospitalization after the accident and coverage for dependents. A life insurance quote will help determine how much this all will cost, as well as provide a comparison of policies offered by the best life insurance companies.
Double Indemnity Coverage
AD&D insurance is frequently referred to as a “double indemnity” policy because AD&D can end up paying out double the normal life insurance death benefit. This is possible because AD&D insurance can be added on as a rider to the original life insurance policy with an equal payout amount.
For example, if the main policy has a payout benefit of $250,000 with an AD&D rider for the same amount, the beneficiary receives a total of $500,000 for a qualified accidental death. Despite the potential benefits, it is important to compare rates and figure out if the increased premiums are worth the benefits and exclusions.
What Are The Disadvantages?
The fact is that most people won’t actually die or be severely injured because of an accident. Accidental death and dismemberment insurance is so specific in what it does and does not include that the chances of using this part of your contract are quite low.
Basically, the same kind of coverage is given by most life insurance policies with fewer types of exclusions and at cheaper rates. So, it can be inferred that this coverage isn’t really necessary in most cases and is somewhat a waste of money.
How Can AD&D Insurance Be Purchased?
Accidental Death and Dismemberment Insurance can be purchased from a variety of sources, such as your current life insurance provider, another major insurer as a stand-alone policy, or even from banks, credit unions and credit card companies. Some health insurance companies also include AD&D insurance with employer group plans. It is inexpensive, averaging around $60 per year.
To find cheap Accidental Death and Dismemberment Insurance, you should compare life insurance quotes online. MyLifeInsuranceQuotes123.com helps you find the cheapest rates for the best policies, coverage and benefits.